Document:

Exhibit (10)O

 

EXECUTION VERSION

 

Published CUSIP Number: 87613JAC8

 

FIVE-YEAR CREDIT AGREEMENT

 

dated as of

 

October 14, 2011

 

among

 

TARGET CORPORATION,

 

THE BANKS LISTED HEREIN,

 

THE CO-DOCUMENTATION AGENTS LISTED HEREIN,

 

BANK OF AMERICA, N.A.,

AS ADMINISTRATIVE AGENT

 

CITIBANK, N.A.,

AS SYNDICATION AGENT

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

CITIGROUP GLOBAL MARKETS INC.,

J. P. MORGAN SECURITIES LLC,

WELLS FARGO SECURITIES, LLC

and

U.S. BANK NATIONAL ASSOCIATION,

AS JOINT LEAD ARRANGERS AND JOINT BOOK MANAGERS

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE 1.
    
	
DEFINITIONS
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.02
    	
Accounting   Terms and Determinations
    	
12
    
	
 
    	
 
    	
 
    
	
ARTICLE 2.
    
	
THE CREDITS
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Commitments   to Lend
    	
13
    
	
 
    	
 
    	
 
    
	
Section 2.02
    	
Notice   of Committed Borrowings
    	
13
    
	
 
    	
 
    	
 
    
	
Section 2.03
    	
Money   Market Borrowings
    	
14
    
	
 
    	
 
    	
 
    
	
Section 2.04
    	
Notice   to Banks; Funding of Loans
    	
17
    
	
 
    	
 
    	
 
    
	
Section 2.05
    	
Reserved
    	
18
    
	
 
    	
 
    	
 
    
	
Section 2.06
    	
Maturity   of Loans
    	
18
    
	
 
    	
 
    	
 
    
	
Section 2.07
    	
Interest   Rates
    	
18
    
	
 
    	
 
    	
 
    
	
Section 2.08
    	
Facility   Fees
    	
22
    
	
 
    	
 
    	
 
    
	
Section 2.09
    	
Optional   Termination or Reduction of Commitments
    	
23
    
	
 
    	
 
    	
 
    
	
Section 2.10
    	
Mandatory   Termination of Commitments
    	
23
    
	
 
    	
 
    	
 
    
	
Section 2.11
    	
Optional   Prepayments
    	
23
    
	
 
    	
 
    	
 
    
	
Section 2.12
    	
General   Provisions as to Payments
    	
23
    
	
 
    	
 
    	
 
    
	
Section 2.13
    	
Funding   Losses
    	
24
    
	
 
    	
 
    	
 
    
	
Section 2.14
    	
Computation   of Interest and Fees
    	
24
    
	
 
    	
 
    	
 
    
	
Section 2.15
    	
Withholding   Tax Exemption
    	
25
    
	
 
    	
 
    	
 
    
	
Section 2.16
    	
Change   of Control
    	
25
    
	
 
    	
 
    	
 
    
	
Section 2.17
    	
Increase   in Combined Commitments
    	
25
    
	
 
    	
 
    	
 
    
	
Section 2.18
    	
Extension   of Termination Date
    	
27
    
	
 
    	
 
    	
 
    
	
Section 2.19
    	
Defaulting   Banks
    	
29
    
	
 
    	
 
    	
 
    
	
Section 2.20
    	
Evidence   of Debt
    	
30
    
	
 
    	
 
    	
 
    
	
ARTICLE 3.
    
	
CONDITIONS
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Effectiveness
    	
30
    
	
 
    	
 
    	
 
    
	
Section 3.02
    	
Borrowings
    	
31
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE 4.
    
	
REPRESENTATIONS AND WARRANTIES
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
Corporate   Existence and Power
    	
32
    
	
 
    	
 
    	
 
    
	
Section 4.02
    	
Corporate   and Governmental Authorization; No Contravention
    	
32
    
	
 
    	
 
    	
 
    
	
Section 4.03
    	
Binding   Effect
    	
32
    
	
 
    	
 
    	
 
    
	
Section 4.04
    	
Financial   Information
    	
33
    
	
 
    	
 
    	
 
    
	
Section 4.05
    	
Litigation
    	
33
    
	
 
    	
 
    	
 
    
	
Section 4.06
    	
Compliance   with ERISA
    	
33
    
	
 
    	
 
    	
 
    
	
Section 4.07
    	
Payment   of Taxes
    	
33
    
	
 
    	
 
    	
 
    
	
Section 4.08
    	
Full   Disclosure
    	
33
    
	
 
    	
 
    	
 
    
	
ARTICLE 5.
    
	
COVENANTS
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Information
    	
33
    
	
 
    	
 
    	
 
    
	
Section 5.02
    	
Maintenance   of Property
    	
35
    
	
 
    	
 
    	
 
    
	
Section 5.03
    	
Conduct   of Business and Maintenance of Existence
    	
35
    
	
 
    	
 
    	
 
    
	
Section 5.04
    	
Compliance   with Laws
    	
36
    
	
 
    	
 
    	
 
    
	
Section 5.05
    	
Consolidations,   Mergers and Sale of Assets
    	
36
    
	
 
    	
 
    	
 
    
	
Section 5.06
    	
Dividends
    	
36
    
	
 
    	
 
    	
 
    
	
Section 5.07
    	
Negative   Pledge
    	
37
    
	
 
    	
 
    	
 
    
	
Section 5.08
    	
Leverage   Ratio
    	
37
    
	
 
    	
 
    	
 
    
	
Section 5.09
    	
Use   of Proceeds
    	
37
    
	
 
    	
 
    	
 
    
	
ARTICLE 6.
    
	
DEFAULTS
    
	
 
    	
 
    	
 
    
	
Section 6.01
    	
Events   of Default
    	
37
    
	
 
    	
 
    	
 
    
	
Section 6.02
    	
Notice   of Default
    	
39
    
	
 
    	
 
    	
 
    
	
ARTICLE 7.
    
	
THE AGENT, THE CO-DOCUMENTATION AGENTS AND THE SYNDICATION AGENT
    
	
 
    	
 
    	
 
    
	
Section 7.01
    	
Appointment   and Authorization
    	
39
    
	
 
    	
 
    	
 
    
	
Section 7.02
    	
Agent   and Affiliates
    	
39
    
	
 
    	
 
    	
 
    
	
Section 7.03
    	
Action   by Agent
    	
39
    
	
 
    	
 
    	
 
    
	
Section 7.04
    	
Consultation   with Experts
    	
39
    
	
 
    	
 
    	
 
    
	
Section 7.05
    	
Liability   of Agent
    	
40
    
	
 
    	
 
    	
 
    
	
Section 7.06
    	
Indemnification
    	
40
    
	
 
    	
 
    	
 
    
	
Section 7.07
    	
Credit   Decision
    	
40
    

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 7.08
    	
Successor   Agent
    	
41
    
	
 
    	
 
    	
 
    
	
Section 7.09
    	
Agent’s   Fee
    	
41
    
	
 
    	
 
    	
 
    
	
Section 7.10
    	
Co-Documentation   Agents, and Syndication Agent
    	
41
    
	
 
    	
 
    	
 
    
	
Section 7.11
    	
Defaults
    	
41
    
	
 
    	
 
    	
 
    
	
ARTICLE 8.
    
	
CHANGE IN CIRCUMSTANCES
    
	
 
    	
 
    	
 
    
	
Section 8.01
    	
Basis   for Determining Interest Rate Inadequate or Unfair
    	
41
    
	
 
    	
 
    	
 
    
	
Section 8.02
    	
Illegality
    	
42
    
	
 
    	
 
    	
 
    
	
Section 8.03
    	
Increased   Cost and Reduced Return
    	
43
    
	
 
    	
 
    	
 
    
	
Section 8.04
    	
Base   Rate Loans Substituted for Affected Fixed Rate Loans
    	
44
    
	
 
    	
 
    	
 
    
	
ARTICLE 9.
    
	
MISCELLANEOUS
    
	
 
    	
 
    	
 
    
	
Section 9.01
    	
Notices
    	
45
    
	
 
    	
 
    	
 
    
	
Section 9.02
    	
No   Waivers; Enforcement
    	
45
    
	
 
    	
 
    	
 
    
	
Section 9.03
    	
Expenses;   Documentary Taxes; Indemnification
    	
46
    
	
 
    	
 
    	
 
    
	
Section 9.04
    	
Sharing   of Set-Off
    	
46
    
	
 
    	
 
    	
 
    
	
Section 9.05
    	
Amendments   and Waivers
    	
47
    
	
 
    	
 
    	
 
    
	
Section 9.06
    	
Successors   and Assigns
    	
48
    
	
 
    	
 
    	
 
    
	
Section 9.07
    	
Collateral
    	
51
    
	
 
    	
 
    	
 
    
	
Section 9.08
    	
Replacement   of Banks
    	
51
    
	
 
    	
 
    	
 
    
	
Section 9.09
    	
Governing   Law; Submission to Jurisdiction
    	
52
    
	
 
    	
 
    	
 
    
	
Section 9.10
    	
Counterparts;   Integration
    	
52
    
	
 
    	
 
    	
 
    
	
Section 9.11
    	
Confidentiality
    	
52
    
	
 
    	
 
    	
 
    
	
Section 9.12
    	
No   Advisory or Fiduciary Responsibility
    	
53
    
	
 
    	
 
    	
 
    
	
Section 9.13
    	
USA   PATRIOT Act Notice
    	
53
    

 

iii

 

	
EXHIBIT A
    	
Note
    	
A-1
    
	
 
    	
 
    	
 
    
	
EXHIBIT B
    	
Form of   Money Market Quote Request
    	
B-1
    
	
 
    	
 
    	
 
    
	
EXHIBIT C
    	
Form of   Invitation for Money Market Quotes
    	
C-1
    
	
 
    	
 
    	
 
    
	
EXHIBIT D
    	
Form of   Money Market Quote
    	
D-1
    
	
 
    	
 
    	
 
    
	
EXHIBIT E
    	
Form of   Commitment Increase Agreement
    	
E-1
    
	
 
    	
 
    	
 
    
	
EXHIBIT F
    	
Form of   Added Bank Agreement
    	
F-1
    
	
 
    	
 
    	
 
    
	
EXHIBIT G
    	
Opinion   of Counsel for the Borrower
    	
G-1
    
	
 
    	
 
    	
 
    
	
EXHIBIT H
    	
Opinion   of McGuireWoods LLP, Special Counsel for the Agent
    	
H-1
    
	
 
    	
 
    	
 
    
	
EXHIBIT I
    	
Assignment   and Assumption Agreement
    	
I-1
    
	
 
    	
 
    	
 
    
	
EXHIBIT J
    	
Form of   Borrowing Notice
    	
J-1
    

 

iv

 

FIVE-YEAR CREDIT AGREEMENT

 

THIS FIVE-YEAR CREDIT AGREEMENT, dated as of October 14, 2011, is among TARGET CORPORATION, a Minnesota corporation, the BANKS listed on the signature pages hereof, the CO-DOCUMENTATION AGENTS and SYNDICATION AGENT listed herein and BANK OF AMERICA, N.A., as Administrative Agent.

 

The Borrower has requested that the Banks provide a revolving credit facility, and the Banks are willing to do so on the terms and conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

ARTICLE 1.
 DEFINITIONS

 

Section 1.01           Definitions.  The following terms, as used herein, have the following meanings:

 

“Absolute Rate Auction” means a solicitation of Money Market Quotes setting forth Money Market Absolute Rates pursuant to Section 2.03.

 

“Accounts Receivable” means those amounts due to a Person that would be categorized as “accounts receivable” in accordance with generally accepted accounting principles.

 

“Added Bank” has the meaning set forth in Section 2.17(a).

 

“Additional Commitment Bank” has the meaning set forth in Section 2.18(d)

 

“Adjusted CD Rate” has the meaning set forth in Section 2.07(b).

 

“Adjusted London Interbank Offered Rate” has the meaning set forth in Section 2.07(c).

 

“Administrative Questionnaire” means, with respect to each Bank, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent (with a copy to the Borrower) duly completed by such Bank.

 

“Agent” means Bank of America, N.A. in its capacity as administrative agent for the Banks hereunder, and its successors in such capacity.

 

“Agreement” means this Five-Year Credit Agreement as the same may be amended or restated from time to time in accordance with the terms hereof.

 

“Anniversary Date” has the meaning set forth in Section 2.18(a).

 

“Applicable Lending Office” means, with respect to any Bank, (i) in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its Euro-Dollar Loans, its Euro-

 

 

Dollar Lending Office and (iii) in the case of its Money Market Loans, its Money Market Lending Office.

 

“Applicable Margin” has the meaning set forth in Section 2.07(h).

 

“Approved Fund” means any Person (other than a natural Person) that (i) is or will be engaged in making, purchasing, holding or otherwise investing in commercial Loans and similar extensions of credit in the ordinary course of its business and (ii) is administered or managed by (x) a Bank, (y) an affiliate of a Bank or (z) an entity or an affiliate of an entity that administers or manages a Bank.

 

“Arrangers” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Wells Fargo Securities, LLC and U.S. Bank National Association, each in its capacity as a joint lead arranger hereunder, and their successors in such capacity.

 

“Assessment Rate” has the meaning set forth in Section 2.07(b).

 

“Assignee” has the meaning set forth in Section 9.06(c).

 

“Assignment and Assumption Agreement” has the meaning set forth in Section 9.06(c).

 

“Bank” means each bank or other financial institution listed on the signature pages hereof, each Assignee which becomes a Bank pursuant to Section 9.06(c), and their respective successors.

 

“Bank of America” means Bank of America, N.A. and its successors.

 

“Base Rate” means, for any day, a fluctuating rate per annum equal to the highest of (i) the Prime Rate for such day, (ii) the sum of 1⁄2 of 1% plus the Federal Funds Rate for such day, and (iii) the London Interbank Offered Rate for such day plus 1.00%.  Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or Federal Funds Rate.  As used in this definition, “London Interbank Offered Rate” means, on any date, the rate per annum equal to (a) the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or such other commercially available source providing quotations of BBA LIBOR as designated by the Agent from time to time) at approximately 11:00 a.m. (London time) determined two Euro-Dollar Business Days prior to such date for Dollar deposits being delivered in the London interbank market for a term of one month commencing that day or (b) if such published rate is not available at such time for any reason, the rate per annum determined by the Agent to be the rate at which deposits in Dollars for delivery on the date of determination in same day funds in the approximate amount of the Base Rate Loan being made or maintained and with a term equal to one month would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at the date and time of determination.

 

“Base Rate Loan” means a Committed Loan to be made by a Bank as a Base Rate Loan in accordance with the applicable Notice of Committed Borrowing or pursuant to Article 8.

 

2

 

“Benefited Bank” has the meaning set forth in Section 9.04.

 

“Borrower” means Target Corporation, a Minnesota corporation, and its successors.

 

“Borrowing” means the aggregation of Loans of one or more Banks to be made to the Borrower pursuant to Article 2 on a single date and for a single Interest Period.  Borrowings are classified for purposes of this Agreement either by reference to the pricing of Loans comprising such Borrowing (e.g., a “Base Rate Borrowing” is a Borrowing comprised of Base Rate Loans, a “Euro-Dollar Borrowing” is a Borrowing comprised of Euro-Dollar Loans, a “CD Borrowing” is a Borrowing comprised of CD Loans, and a “Fixed Rate Borrowing” is a Borrowing comprised of Fixed Rate Loans) or by reference to the provisions of Article 2 under which participation therein is determined (i.e., a “Committed Borrowing” is a Borrowing under Section 2.01 in which all Banks participate in proportion to their Commitments, while a “Money Market Borrowing” is a Borrowing under Section 2.03 in which the Bank participants are determined on the basis of their bids in accordance therewith).

 

“Capital Lease” means a lease which gives rise to Capital Lease Obligations.

 

“Capital Lease Obligations” means all obligations of a Person as lessee which are capitalized in accordance with generally accepted accounting principles.

 

“CD Base Rate” has the meaning set forth in Section 2.07(b).

 

“CD Loan” means a Committed Loan to be made by a Bank as a CD Loan in accordance with the applicable Notice of Committed Borrowing.

 

“Co-Documentation Agents” means the banks listed on the signature pages hereto, in their capacity as co-documentation agents of the credit facility hereunder.

 

“Commitment” means, with respect to each Bank, the amount set forth opposite the name of such Bank on the signature pages hereof or pursuant to any Assignment and Assumption Agreement, as such amount may be reduced from time to time pursuant to Section 2.09 or 2.18, or may be increased at any time pursuant to Section 2.17, the aggregate amount of which at the Effective Date is $2,250,000,000.

 

“Committed  Loan” means a loan made by a Bank pursuant to Section 2.01.

 

“Consolidated  Rental  Expense” means, for any period, the aggregate amount, determined on a consolidated basis, of rental expense of the Borrower and its Consolidated Subsidiaries accrued during such period, but excluding any unusual non-cash adjustments to rental expenses of the Borrower related to prior periods.

 

“Consolidated  Subsidiary” means, at any date, any Subsidiary or other entity the accounts of which would be consolidated with those of the Borrower in its consolidated financial statements if such statements were prepared as of such date.

 

“Consolidated  Tangible  Net  Worth” means, at any date, the consolidated stockholders’ equity of the Borrower and its Consolidated Subsidiaries less their consolidated Intangible

 

3

 

Assets, all determined as of such date.  For purposes of this definition “Intangible Assets” means the amount (to the extent reflected in determining such consolidated stockholders’ equity) of (i) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of assets of a going concern business made within twelve months after the acquisition of such business) subsequent to January 29, 2011 in the book value of any asset owned by the Borrower or a Consolidated Subsidiary, (ii) all Investments in unconsolidated Subsidiaries and all equity investments in Persons which are not Subsidiaries and (iii) all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, anticipated future benefit of tax loss carry-forwards, copyrights, organization or developmental expenses and other intangible assets.

 

“Convertible Preferred Stock” means all preferred stock of the Borrower that is convertible into a fixed number of shares of common stock of the Borrower at the option of the holder.

 

“Debt” of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all Capital Lease Obligations of such Person, (v) any obligation of the types described in the foregoing clauses (i)-(iv) that is secured by a Lien on any asset of such Person, whether or not such obligation is otherwise an obligation of such Person, and (vi) any obligation of the types described in the foregoing clauses (i)-(v) that is Guaranteed by such Person.

 

“Debt Rating” means a rating of the Borrower’s long-term debt which is not secured or supported by a guarantee, letter of credit or other form of credit enhancement.  If a Debt Rating by a Rating Agency is required to be at or above a specified level and such Rating Agency shall have changed its system of classifications after the date hereof, the requirement will be met if the Debt Rating by such Rating Agency is at or above the new rating which most closely corresponds to the specified level under the old rating system.

 

“Default” means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

 

“Defaulting Bank” means, subject to Section 2.19(b), any Bank that (i) has failed to fund any portion of the Loans required to be funded by it hereunder within two Domestic Business Days of the date required to be funded by it hereunder, unless such Bank notifies the Agent and the Borrower in writing that such failure is the result of such Bank’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, (ii) has otherwise failed to pay over to the Agent or any other Bank any other amount required to be paid by it hereunder within two Domestic Business Days of the date when due, unless the subject of a good faith dispute, (iii) has notified the Borrower, the Agent or any Bank in writing that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder (unless such notification or statement also states

 

4

 

that its intention not to comply with its funding obligations arises from its good faith belief that the conditions thereto have not been and will not be satisfied), (iv) has failed, within three Domestic Business Days after written request by the Agent, to confirm in writing to the Agent that it will comply with its prospective funding obligations hereunder (provided that such Bank shall cease to be a Defaulting Bank pursuant to this clause (iv) upon Agent’s receipt of written confirmation from such Bank that such Bank will comply with its prospective funding obligations hereunder), or (v) has, or has a direct or indirect parent company that has, (A) become the subject of a bankruptcy or insolvency proceeding, (B) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (C) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Bank shall not be a Defaulting Bank solely by virtue of the ownership or acquisition of any equity interest in that Bank or any direct or indirect parent company thereof by a governmental authority so long as such ownership interest does not result in or provide such Bank with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Bank (or such governmental authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Bank.  Any determination by the Agent that a Bank is a Defaulting Bank under clauses (i) through (v) above shall be conclusive and binding absent manifest error, and such Bank shall be deemed to be a Defaulting Bank (subject to Section 2.19(b)) upon delivery of written notice of such determination to the Borrower and each other Bank.

 

“Dollar” and “$” mean lawful money of the United States.

 

“Domestic Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close.

 

“Domestic Lending Office” means, as to each Bank, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Bank may hereafter designate as its Domestic Lending Office by notice to the Borrower and the Agent; provided that any Bank may so designate separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and its CD Loans on the other hand, in which case all references herein to the Domestic Lending Office of such Bank shall be deemed to refer to either or both of such offices, as the context may require.

 

“Domestic Loans” means CD Loans or Base Rate Loans or both.

 

“Domestic Reserve Percentage” has the meaning set forth in Section 2.07(b).

 

“Effective Date” means the date this Agreement becomes effective in accordance with Section 3.01.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor statute.

 

“ERISA Affiliate” means, with respect to the Borrower or any of its Subsidiaries, at any time, each trade or business (whether or not incorporated) that would, at the time, be treated

 

5

 

together with the Borrower or any of its Subsidiaries as a single employer under Section 4001 of ERISA or Section 414(b), (c), (f), (m) or (o) of the Internal Revenue Code.

 

“Euro-Dollar Business Day” means any Domestic Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in London.

 

“Euro-Dollar Lending Office” means, as to each Bank, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Dollar Lending Office) or such other office, branch or affiliate of such Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower and the Agent.

 

“Euro-Dollar Loan” means a Committed Loan to be made by a Bank as a Euro-Dollar Loan in accordance with the applicable Notice of Committed Borrowing.

 

“Euro-Dollar Reserve Percentage” has the meaning set forth in Section 2.07(c).

 

“Event of Default” has the meaning set forth in Section 6.01.

 

“Exchange Act” means, at any time, the Securities Exchange Act of 1934, as amended from time to time, and any successor statute, and the rules and regulations promulgated thereunder.

 

“Existing Five-Year Agreement” means the Five-Year Credit Agreement dated as of April 12, 2007, among the Borrower, the banks listed therein, the senior managing agents, managing agents, co-agents, co-documentation agents and syndication agent listed therein, and Bank of America, N.A., as administrative agent, as the same may be amended or restated from time to time.

 

“Existing Termination Date” has the meaning set forth in Section 2.18(a).

 

“Extending Bank” has the meaning set forth in Section 2.18(e).

 

“Federal Funds Rate” means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day, provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next succeeding Domestic Business Day, and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to the Agent (in its individual capacity) on such day on such transactions as determined by the Agent.

 

“Fixed Rate Loans” means CD Loans or Euro-Dollar Loans or Money Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant to Section 8.01(a)) or any combination of the foregoing.

 

6

 

“Group” means the Borrower and its Subsidiaries, taken as a whole.

 

“Guarantee” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay, or advance or supply funds for the purchase or payment of, such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has a corresponding meaning.

 

“Income Taxes” means, for any period, the consolidated provision for income taxes of the Borrower and its Consolidated Subsidiaries accrued for such period.

 

“Increased Commitment Date” has the meaning set forth in Section 2.17(b).

 

“Increasing Bank” has the meaning set forth in Section 2.17(a).

 

“Intercompany Debt” means Debt owed by the Borrower and/or one or more of its Subsidiaries or any trust the beneficiary of which is controlled by the Borrower to the Borrower and/or one or more of its Subsidiaries or any trust the beneficiary of which is controlled by the Borrower.

 

“Interest Period” means: (i) with respect to each Euro-Dollar Borrowing, the period commencing on the date of such Borrowing and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable Notice of Borrowing; provided that:

 

(a)           any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day;

 

(b)           any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of a calendar month; and

 

(c)           any Interest Period commencing prior to the Termination Date which would otherwise end after the Termination Date shall end on the Termination Date;

 

7

 

(ii)           with respect to each CD Borrowing, the period commencing on the date of such Borrowing and ending 30, 60, 90 or 180 days thereafter, as the Borrower may elect in the applicable Notice of Borrowing; provided that:

 

(a)           any Interest Period (other than an Interest Period determined pursuant to clause (b) below) which would otherwise end on a day which is not a Domestic Business Day shall be extended to the next succeeding Domestic Business Day; and

 

(b)           any Interest Period commencing prior to the Termination Date which would otherwise end after the Termination Date shall end on the Termination Date;

 

(iii)          with respect to each Base Rate Borrowing, the period commencing on the date of such Borrowing and ending 30 days thereafter; provided that:

 

(a)           any Interest Period (other than an Interest Period determined pursuant to clause (b) below) which would otherwise end on a day which is not a Domestic Business Day shall be extended to the next succeeding Domestic Business Day; and

 

(b)           any Interest Period commencing prior to the Termination Date which would otherwise end after the Termination Date shall end on the Termination Date;

 

(iv)          with respect to each Money Market LIBOR Borrowing, the period commencing on the date of such Borrowing and ending such whole number of months thereafter as the Borrower may elect in accordance with Section 2.03; provided that:

 

(a)           any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day;

 

(b)           any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of a calendar month; and

 

(c)           any Interest Period which would otherwise end after the Termination Date applicable to the Bank holding a related Money Market LIBOR Loan shall end on the respective Termination Date for such Bank; and

 

(v)           with respect to each Money Market Absolute Rate Borrowing, the period commencing on the date of such Borrowing and ending such number of days thereafter (but not less than 14 days) as the Borrower may elect in accordance with Section 2.03; provided that:

 

8

 

(a)           any Interest Period which would otherwise end on a day which is not a Domestic Business Day shall be extended to the next succeeding Domestic Business Day; and

 

(b)           any Interest Period which would otherwise end after the Termination Date applicable to the Bank holding a related Money Market Absolute Rate Loan shall end on the respective Termination Date for such Bank.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.

 

“Investment” means any investment in any Person, whether by means of share purchase, capital contribution, loan, time deposit or otherwise.

 

“Level I Status” exists at any date if at such date, the Borrower is at Level I in the chart appearing in the definition of Applicable Margin as a result of its Debt Ratings as determined in accordance with such definition.

 

“Level II Status” exists at any date if at such date the Borrower is at Level II in the chart appearing in the definition of Applicable Margin as a result of its Debt Ratings as determined in accordance with such definition.

 

“Level III Status” exists at any date if at such date the Borrower is at Level III in the chart appearing in the definition of Applicable Margin as a result of its Debt Ratings as determined in accordance with such definition.

 

“Level IV Status” exists at any date if at such date the Borrower is at Level IV in the chart appearing in the definition of Applicable Margin as a result of its Debt Ratings as determined in accordance with such definition.

 

“Level V Status” exists at any date if, at such date the Borrower is at Level V in the chart appearing in the definition of Applicable Margin as a result of its Debt Ratings as determined in accordance with such definition.

 

“LIBOR Auction” means a solicitation of Money Market Quotes setting forth Money Market Margins based on the London Interbank Offered Rate pursuant to Section 2.03.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset.   For the purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor under any conditional sale agreement or other title retention agreement relating to such asset, but excluding any asset held under a bona fide consignment arrangement.

 

“Loan” means a Domestic Loan or a Euro-Dollar Loan or a Money Market Loan and “Loans” means Domestic Loans or Euro-Dollar Loans or Money Market Loans or any combination of the foregoing.

 

9

 

“London Interbank Offered Rate” has the meaning set forth in Section 2.07(c).

 

“Material Debt” means Debt (other than (i) Debt incurred hereunder and (ii) Intercompany Debt) of the Borrower and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal amount exceeding $100,000,000.

 

“Money Market Absolute Rate” has the meaning set forth in Section 2.03(d).

 

“Money Market Absolute Rate Loan” means a loan to be made by a Bank pursuant to an Absolute Rate Auction.

 

“Money Market Lending Office” means, as to each Bank, its Domestic Lending Office or such other office, branch or affiliate of such Bank as it may hereafter designate as its Money Market Lending Office by notice to the Borrower and the Agent; provided that any Bank may from time to time by notice to the Borrower and the Agent designate separate Money Market Lending Offices for its Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate Loans, on the other hand, in which case all references herein to the Money Market Lending Office of such Bank shall be deemed to refer to either or both of such offices, as the context may require.

 

“Money Market LIBOR Loan” means a loan to be made by a Bank pursuant to a LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant to Section 8.01(a)).

 

“Money Market Loan” means a Money Market LIBOR Loan or a Money Market Absolute Rate Loan.

 

“Money Market Margin” has the meaning set forth in Section 2.03(d).

 

“Money Market Quote” means an offer by a Bank to make a Money Market Loan in accordance with Section 2.03.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Non-Extending Bank” has the meaning set forth in Section 2.18(b).

 

“Notes” means promissory notes of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Loans and “Note” means any one of such promissory notes issued hereunder.

 

“Notice Date” has the meaning set forth in Section 2.18(a).

 

“Notice of Borrowing” means a Notice of Committed Borrowing (as defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section 2.03(f)).

 

“Parent” means, with respect to any Bank, any Person controlling such Bank.

 

“Participant” has the meaning set forth in Section 9.06(b).

 

10

 

“Pension Act” means the Pension Protection Act of 2006.

 

“Pension Funding Rules” means the rules of the Internal Revenue Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Internal Revenue Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Internal Revenue Code and Sections 302, 303, 304 and 305 of ERISA.

 

“Person” means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

“Plan” means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and is either (i) maintained by the Borrower or any Subsidiary for employees of the Borrower and/or any Subsidiary or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which the Borrower or any Subsidiary is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions.

 

“Prime Rate” means the rate of interest publicly announced from time to time by Bank of America, N.A. as its prime rate.

 

“Rating Agency” means S&P or Moody’s.

 

“Reference Banks” means Bank of America, N.A., JPMorgan Chase Bank, N.A. and Citibank, N.A., or the successors thereof, and “Reference Bank” means any one of such Reference Banks.

 

“Refunding Borrowing” means a Committed Borrowing which, after application of the proceeds thereof, results in no net increase in the outstanding principal amount of Committed Loans made by any Bank.

 

“Registered Public Accounting Firm” has the meaning specified in the federal securities laws.

 

“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

“Request Period” has the meaning set forth in Section 2.18(a).

 

“Required Banks” means at any time Banks having in the aggregate more than 50% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, Banks holding in the aggregate more than 50% of the aggregate unpaid principal amount of the Loans (excluding Money Market Loans); provided that the Commitment of, and the portion of

 

11

 

the aggregate unpaid principal amount of the Loans held by, any Defaulting Bank shall be excluded for purposes of making a determination of Required Banks.

 

“Response Deadline” has the meaning set forth in Section 2.18(b).

 

“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc., and any successor thereto .

 

“Significant Subsidiary” means a “Significant Subsidiary” of the Borrower, as such term is defined in Regulation S-X promulgated by the Securities and Exchange Commission.

 

“Status” means, at any date, whichever of Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status exists at such date.

 

“Subsidiary” means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Borrower.

 

“Syndication Agent” means Citibank, N.A. in its capacity as syndication agent of the credit facility hereunder.

 

“Termination Date” means the later of (a) October 14, 2016 or (b) if the term of this Agreement is extended pursuant to Section 2.18, such extended termination date as determined pursuant to such Section; provided, however, that, in each case, if such date is not a Domestic Business Day, the next preceding Domestic Business Day; provided  further that with respect to any Non-Extending Bank, the Termination Date of such Non-Extending Bank’s Commitment shall be the Existing Termination Date notwithstanding the extension of Commitments by any other Bank pursuant to Section 2.18.

 

“Total Capitalization” means, at any date, the sum (without duplication) of (i) the consolidated stockholders’ equity of the Borrower and its Consolidated Subsidiaries plus (ii) the net amount of Convertible Preferred Stock as reflected in the consolidated statements of financial position of the Borrower and its Consolidated Subsidiaries plus (iii) Total Finance Liabilities, all determined as of such date.

 

“Total Finance Liabilities” means, at any date, the sum of (i) all Debt of the Borrower and its Consolidated Subsidiaries, determined on a consolidated basis as of such date, plus (ii) an amount equal to (a) the Consolidated Rental Expense for the period of four consecutive fiscal quarters of the Borrower ending on such date times (b) eight.

 

“Voting Stock” means capital stock of any class or classes (however designated) having voting power for the election of directors of the Borrower, other than stock having such power only by reason of the happening of a contingency.

 

Section 1.02           Accounting Terms and Determinations.  Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be

 

12

 

prepared in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Borrower’s independent public accountants) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Banks (provided that for the purpose of calculating covenant compliance under Article 5, the effect of FASB ASC Topic 815 shall not be applied); provided that, if the Borrower notifies the Agent that the Borrower wishes to amend any covenant in Article 5 to eliminate the effect of any change in generally accepted accounting principles on the operation of such covenant (or if the Agent notifies the Borrower that the Required Banks wish to amend Article 5 for such purpose), then the Borrower’s compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect for purposes of this Agreement immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Banks.

 

ARTICLE 2.
 THE CREDITS

 

Section 2.01           Commitments to Lend.  Each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans to the Borrower pursuant to this Section from time to time after the Effective Date and prior to the Termination Date in amounts such that the aggregate principal amount of Committed Loans by such Bank at any one time outstanding shall not exceed the amount of its Commitment.  Each Borrowing under this Section shall be in an aggregate principal amount of $25,000,000 or any larger multiple of $5,000,000 (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02(b)) and shall be made from the several Banks ratably in proportion to their respective Commitments.  Within the foregoing limits, the Borrower may borrow under this Section, repay, or to the extent permitted by Section 2.11, prepay Loans and reborrow at any time prior to the Termination Date under this Section.

 

Section 2.02           Notice of Committed Borrowings.  The Borrower shall give the Agent notice (a “Notice of Committed Borrowing”) not later than 11:00 A.M. (New York City time) on (x) the date of each Base Rate Borrowing, (y) the second Domestic Business Day before each CD Borrowing and (z) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:

 

(a)           the date of such Borrowing, which shall be a Domestic Business Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing;

 

(b)           the aggregate amount of such Borrowing;

 

(c)           whether the Loans comprising such Borrowing are to be CD Loans, Base Rate Loans or Euro-Dollar Loans; and

 

(d)           in the case of a Fixed Rate Borrowing, the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period.

 

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Section 2.03           Money Market Borrowings.

 

(a)           The Money Market Option.  In addition to Committed Borrowings pursuant to Section 2.01, the Borrower may, as set forth in this Section, request the Banks to make offers to make, prior to the Termination Date only, Money Market Loans to the Borrower.  The Banks may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section.  No Money Market Loan shall be deemed to be a use or reduction of the Commitment of any Bank, including the Bank making such Money Market Loan.  Notwithstanding the foregoing, while any Money Market Loan is outstanding, the availability of Committed Loans under this Agreement shall be reduced dollar-for-dollar by an amount equal to the outstanding principal amount of such Money Market Loan.

 

(b)           Money Market Quote Request.  When the Borrower wishes to request offers to make Money Market Loans under this Section, it shall transmit to the Agent by facsimile transmission a Money Market Quote Request substantially in the form of Exhibit B hereto so as to be received no later than 11:00 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction, or (y) the Domestic Business Day next preceding the date of Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective) specifying:

 

(i)            the proposed date of Borrowing, which shall be a Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic Business Day in the case of an Absolute Rate Auction;

 

(ii)           the aggregate amount of such Borrowing, which shall be $25,000,000 or a larger multiple of $5,000,000 and which shall not exceed the aggregate amount available in accordance with Section 3.02(b);

 

(iii)          the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period; and

 

(iv)          whether the Money Market Quotes requested are to set forth a Money Market Margin or a Money Market Absolute Rate.

 

The Borrower may request offers to make Money Market Loans for more than one Interest Period in a single Money Market Quote Request.  No Money Market Quote Request shall be given within five Euro-Dollar Business Days (or such other number of days as the Borrower and the Agent may agree) of any other Money Market Quote Request.

 

(c)           Invitation for Money Market Quotes.  Promptly upon receipt of a Money Market Quote Request, the Agent shall send to the Banks by facsimile transmission an Invitation for Money Market Quotes substantially in the form of Exhibit C hereto, which

 

14

 

shall constitute an invitation by the Borrower to each Bank to submit Money Market Quotes offering to make the Money Market Loans to which such Money Market Quote Request relates in accordance with this Section.

 

(d)           Submission and Contents of Money Market Quotes.

 

(i)            Each Bank may submit a Money Market Quote containing an offer or offers to make Money Market Loans in response to any Invitation for Money Market Quotes.  Each Money Market Quote must comply with the requirements of this subsection (d) and must be submitted to the Agent by facsimile transmission at its offices specified in or pursuant to Section 9.01 not later than (x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) 10:15 A.M. (New York City time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective); provided that Money Market Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) 1:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) 10:00 A.M. (New York City time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction.  Subject to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except with the written consent of the Agent given on the instructions of the Borrower.

 

(ii)           Each Money Market Quote shall be in substantially the form of Exhibit D hereto and shall in any case specify:

 

(A)          the proposed date of Borrowing;

 

(B)           the principal amount of the Money Market Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Bank, (x) must be $5,000,000 or a larger multiple of $l,000,000, (y) may not exceed the principal amount of Money Market Loans for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Money Market Loans for which offers being made by such quoting Bank may be accepted;

 

(C)           in the case of a LIBOR Auction, the margin above or below the applicable London Interbank Offered Rate (the “Money Market Margin”) offered for each such Money Market Loan, expressed as a

 

15

 

percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate;

 

(D)          in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the “Money Market Absolute Rate”) offered for each such Money Market Loan; and

 

(E)           the identity of the quoting Bank.

 

A Money Market Quote may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Money Market Quotes.

 

(iii)          Any Money Market Quote shall be disregarded if it:

 

(A)          is not substantially in conformity with Exhibit D hereto or does not specify all of the information required by subsection (d)(ii);

 

(B)           contains qualifying, conditional or similar language;

 

(C)           proposes terms other than or in addition to those set forth in the applicable Invitation for Money Market Quotes; or

 

(D)          arrives after the time set forth in subsection (d)(i).

 

(e)           Notice to Borrower.  The Agent shall promptly notify the Borrower of the terms (i) of any Money Market Quote submitted by a Bank that is in accordance with subsection (d) and (ii) of any Money Market Quote that amends, modifies or is otherwise inconsistent with a previous Money Market Quote submitted by such Bank with respect to the same Money Market Quote Request.  Any such subsequent Money Market Quote shall be disregarded by the Agent unless such subsequent Money Market Quote is submitted solely to correct a manifest error in such former Money Market Quote. The Agent’s notice to the Borrower shall specify (A) the aggregate principal amount of Money Market Loans for which offers have been received for each Interest Period specified in the related Money Market Quote Request, (B) the respective principal amounts and Money Market Margins or Money Market Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Money Market Loans for which offers in any single Money Market Quote may be accepted.

 

(f)            Acceptance and Notice by Borrower.  Not later than 11:00 A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction, or (y) the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), the Borrower shall notify the Agent of its acceptance or non-acceptance of the offers so notified to it

 

16

 

pursuant to subsection (e).  In the case of acceptance, such notice (a “Notice of Money Market Borrowing”) shall specify the aggregate principal amount of offers for each Interest Period that are accepted.  The Borrower may accept any Money Market Quote in whole or in part; provided that:

 

(i)            the aggregate principal amount of each Money Market Borrowing may not exceed the applicable amount set forth in the related Money Market Quote Request;

 

(ii)           the principal amount of each Money Market Borrowing must be $25,000,000 or a larger multiple of $5,000,000;

 

(iii)          acceptance of offers may only be made on the basis of ascending Money Market Margins or Money Market Absolute Rates, as the case may be; and

 

(iv)          the Borrower may not accept any offer that is described in subsection (d)(iii) or that otherwise fails to comply with the requirements of this Agreement.

 

(g)           Allocation by Agent.  If offers are made by two or more Banks with the same Money Market Margins or Money Market Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Money Market Loans in respect of which such offers are accepted shall be allocated by the Agent among such Banks as nearly as possible (in multiples of $1,000,000, as the Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers.  Determinations by the Agent of the amounts of Money Market Loans shall be conclusive in the absence of manifest error.

 

Section 2.04           Notice to Banks; Funding of Loans.

 

(a)           Upon receipt of a Notice of Borrowing, the Agent shall promptly notify each Bank of the contents thereof and of such Bank’s share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower.

 

(b)           Not later than 1:00 P.M. (New York City time) on the date of each Borrowing, each Bank participating therein shall (except as provided in subsection (c) of this Section 2.04) make available its share of such Borrowing, in Federal or other funds immediately available in San Francisco, California, to the Agent at its address referred to in Section 9.01.  Unless the Agent determines that any applicable condition specified in Article 3 has not been satisfied, the Agent will make the funds so received from the Banks available to the Borrower at the Agent’s aforesaid address.

 

(c)           If any Bank makes a new Loan hereunder on a day on which the Borrower is to repay all or any part of an outstanding Loan from such Bank, such Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed and the amount being repaid shall

 

17

 

be made available by such Bank to the Agent as provided in subsection (b), or remitted by the Borrower to the Agent as provided in Section 2.12, as the case may be.

 

(d)           Unless the Agent shall have received notice from a Bank prior to the date of any Borrowing that such Bank will not make available to the Agent such Bank’s share of such Borrowing, the Agent may assume that such Bank has made such share available to the Agent on the date of such Borrowing in accordance with subsections (b) and (c) of this Section 2.04 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount.  If and to the extent that such Bank shall not have so made such share available to the Agent, such Bank and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate or the interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case of such Bank, the Federal Funds Rate.  If such Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bank’s Loan included in such Borrowing for purposes of this Agreement.  The failure of any Bank to make available its share of any Borrowing shall not relieve any other Bank of its corresponding obligation to do so on the date when due, and no Bank shall be responsible for the failure of any other Bank to so make its share available.

 

Section 2.05           Reserved.

 

Section 2.06           Maturity of Loans.  Each Loan included in any Borrowing shall mature, and the principal amount thereof shall be due and payable, on the last day of the Interest Period applicable to such Borrowing.

 

Section 2.07           Interest Rates.

 

(a)           Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the sum of the Applicable Margin for such day plus the Base Rate for such day.  Such interest shall be payable for each Interest Period on the last day thereof.  Any overdue principal of or interest on any Base Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to Base Rate Loans for such day.

 

(b)           Each CD Loan shall bear interest on the outstanding principal amount thereof, for each day during the Interest Period applicable thereto, at a rate per annum equal to the sum of the Applicable Margin for such day plus the Adjusted CD Rate for such Interest Period; provided that if any CD Loan shall, as a result of clause (ii)(b) of the definition of Interest Period, have an Interest Period of less than 30 days, such Loan shall bear interest during such Interest Period at the rate applicable to Base Rate Loans during such period.  Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than 90 days, at intervals of 90 days after the first day thereof.  Any overdue principal of or interest on any CD Loan shall bear interest,

 

18

 

payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the higher of (i) the sum of the Applicable Margin for such day plus the Adjusted CD Rate applicable to such Loan and (ii) the rate applicable to Base Rate Loans for such day.

 

The “Adjusted CD Rate” applicable to any Interest Period means a rate per annum determined pursuant to the following formula:

 

	
ACDR(1) =
    	
 
    	
[CDBR]  + AR
    
	
 
    	
 
    	
[1.00-DRP]
    
	
ACDR   =
    	
 
    	
Adjusted   CD Rate
    	
 
    	
 
    
	
CDBR   =
    	
 
    	
CD   Base Rate
    	
 
    	
 
    
	
DRP   =
    	
 
    	
Domestic   Reserve Percentage
    	
 
    	
 
    
	
AR   =
    	
 
    	
Assessment   Rate
    	
 
    	
 
    

 

The “CD Base Rate” applicable to any Interest Period is the rate of interest determined by the Agent to be the average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid at 11:00 A.M. (New York City time) (or as soon thereafter as practicable) on the first day of such Interest Period by two or more New York certificate of deposit dealers of recognized standing for the purchase at face value from each Reference Bank of its certificates of deposit in an amount comparable to the principal amount of the CD Loan of such Reference Bank to which such Interest Period applies and having a maturity comparable to such Interest Period.

 

“Domestic Reserve Percentage” means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including without limitation any basic, supplemental or emergency reserves) for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of new non-personal time deposits in dollars in New York City having a maturity comparable to the related Interest Period and in an amount of $100,000 or more.  The Adjusted CD Rate shall be adjusted automatically on and as of the effective date of any change in the Domestic Reserve Percentage.

 

“Assessment Rate” means for any day the annual assessment rate in effect on such day which is payable by a member of the Bank Insurance Fund classified as adequately capitalized and within supervisory subgroup “A” (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. § 327.4(a) (or any successor provision) to the Federal Deposit Insurance Corporation (or any successor) for such Corporation’s (or such successor’s) insuring time deposits, at offices of such institution in the United States. The Adjusted CD Rate shall be adjusted automatically on and as of the effective date of any change in the Assessment Rate.

 

(1)  Rounded upward, if necessary, to the next higher 1/100 of 1%.

 

19

 

(c)           Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for each day during the Interest Period applicable thereto, at a rate per annum equal to the sum of the Applicable Margin for such day plus the Adjusted London Interbank Offered Rate for such Interest Period.  Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof.

 

The “Adjusted London Interbank Offered Rate” applicable to any Interest Period means a rate per annum equal to the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.

 

The “London Interbank Offered Rate” means, for such Interest Period, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Agent from time to time) at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.  If such rate is not available at such time for any reason, then the “London Interbank Offered Rate” for such Interest Period shall be the rate per annum determined by the Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Euro-Dollar Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days prior to the commencement of such Interest Period.

 

“Euro-Dollar Reserve Percentage” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Bank, under regulations issued from time to time by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).  The applicable interest rate for each outstanding Euro-Dollar Loan shall be adjusted automatically as of the effective date of any change in the Euro-Dollar Reserve Percentage.

 

(d)           Any overdue principal of or interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day from and including the date payment thereof was due to but excluding the date of actual payment, at a rate per annum equal to the sum of 2% plus the higher of (i) the sum of the Applicable Margin for such day plus the Adjusted London Interbank Offered Rate applicable to such Loan and (ii) the sum of the

 

20

 

Applicable Margin for such day plus the Adjusted London Interbank Offered Rate as of such day applicable to such Loan amount for a presumed one-month Interest Period (or if such amount due remains unpaid more than three Euro-Dollar Business Days, then for a presumed six-month Interest Period), or, if the circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the rate applicable to Base Rate Loans for such day.

 

(e)           Subject to Section 8.01(a), each Money Market LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the London Interbank Offered Rate for such Interest Period (determined in accordance with Section 2.07(c) as if the related Money Market LIBOR Borrowing were a Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the Bank making such Loan in accordance with Section 2.03.  Each Money Market Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Money Market Absolute Rate quoted by the Bank making such Loan in accordance with Section 2.03.  Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof.  Any overdue principal of or interest on any Money Market Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate applicable to Base Rate Loans for such day.

 

(f)            The Agent shall determine each interest rate applicable to the Loans hereunder.  The Agent shall give prompt notice to the Borrower and the participating Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error.

 

(g)           Each Reference Bank agrees to use its best efforts to furnish quotations to the Agent as contemplated by this Section.  If any Reference Bank does not furnish a timely quotation, the Agent shall determine the relevant interest rate on the basis of the quotation or quotations furnished by the remaining Reference Bank or Banks or, if none of such quotations is available on a timely basis, the provisions of Section 8.01 shall apply.

 

(h)           The “Applicable Margin” with respect to any Euro-Dollar Loan, CD Loan or Base Rate Loan at any date is the applicable percentage amount set forth below in the applicable column, which shall be (i) determined based upon the Debt Rating as specified below and (ii) applicable to all Euro-Dollar Loans, CD Loans and Base Rate Loans existing on and after the first date a specific Debt Rating is effective (the “Debt Rating Date”) and continuing until, but not including, the immediate next Debt Rating Date:

 

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Level
    	
 
    	
Debt Rating
    	
 
    	
Applicable
   Margin for
   CD Loans
   and Euro-
   Dollar Loans
    	
 
    	
Applicable
   Margin for
   Base Rate
   Loans
    	
 
    
	
I
    	
 
    	
Greater   than or equal to AA- by S&P or Aa3 by Moody’s
    	
 
    	
0.610
    	
%
    	
0.000
    	
%
    
	
II
    	
 
    	
A+   by S&P or A1 by Moody’s
    	
 
    	
0.680
    	
%
    	
0.000
    	
%
    
	
III
    	
 
    	
A   by S&P or A2 by Moody’s
    	
 
    	
0.800
    	
%
    	
0.000
    	
%
    
	
IV
    	
 
    	
A-   by S&P or A3 by Moody’s
    	
 
    	
0.900
    	
%
    	
0.000
    	
%
    
	
V
    	
 
    	
Equal   to or less than BBB+ by S&P or Baa1 by Moody’s
    	
 
    	
1.125
    	
%
    	
0.125
    	
%
    

 

In the event that the Debt Ratings assigned by S&P and Moody’s differ, the Applicable Margin and the Facility Fee Rate referred to in Section 2.08 shall be determined by reference to the rating level having the higher Debt Rating unless such ratings are more than one level apart, in which case the rating level that is one tier below the higher of the two ratings shall determine the Applicable Margin and the Facility Fee Rate.  The final Debt Rating level by which the Applicable Margin and the Facility Fee Rate are determined is referred to herein as a “Level”.

 

In the event that either S&P or Moody’s (but not both) shall not make a Debt Rating, the above calculations of the Applicable Margin and the Facility Fee Rate shall be made based on (i) the rating provided by S&P or Moody’s, whichever shall then maintain a current Debt Rating, and (ii) the Debt Rating provided by a nationally recognized securities rating agency selected by the Borrower and approved by the Agent, which shall be substituted for either S&P or Moody’s, as the case may be (the “Alternative Rating Agency”), and the Alternative Rating Agency’s equivalent rating levels shall be substituted for the Debt Rating levels of either S&P or Moody’s, whichever shall no longer then make the applicable Debt Rating.

 

Section 2.08           Facility Fees.

 

(a)           The Borrower shall pay to the Agent for the account of the Banks ratably in proportion to their respective Commitments a facility fee at the Facility Fee Rate (as defined below).  Such facility fee shall accrue from and including the date hereof to but excluding the Termination Date, on the daily aggregate amount of the Commitments (whether used or unused).

 

(b)           “Facility Fee Rate” means, at any date, a rate per annum equal to (i) 0.065%, if Level I Status exists at such date, (ii) 0.070%, if Level II Status exists at such 

 

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date, (iii) 0.075%, if Level III Status exists at such date, (iv) 0.100%, if Level IV Status exists at such date, and (v) 0.125% if Level V Status exists at such date.

 

(c)           Accrued fees under this Section shall be payable quarterly in arrears on each September 1, December 1, March 1 and June 1 and upon the respective Termination Date for each Bank (and, if later, the date the Loans shall be repaid in their entirety).

 

Section 2.09           Optional Termination or Reduction of Commitments.  The Borrower may, upon at least three Domestic Business Days’ notice to the Agent, (a) terminate the Commitments at any time, if no Loans are outstanding at such time, or (b) ratably reduce from time to time by an aggregate amount of $25,000,000 or any larger multiple of $5,000,000, the aggregate amount of the Commitments in excess of the aggregate outstanding principal amount of the Loans.

 

Section 2.10           Mandatory Termination of Commitments.  The Commitments of each Bank shall terminate on its respective Termination Date, and any Loans then outstanding (together with accrued interest thereon) shall be due and payable on such date.

 

Section 2.11           Optional Prepayments.

 

(a)           The Borrower may, upon at least one Domestic Business Day’s notice to the Agent, prepay any Base Rate Borrowing (or any Money Market Borrowing bearing interest at the Base Rate pursuant to Section 8.01(a)) in whole at any time, or from time to time in part in amounts aggregating $25,000,000 or any larger multiple of $5,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment.  Each such optional prepayment shall be applied to prepay ratably the Loans of the several Banks included in such Borrowing.

 

(b)           Except as provided in Sections 2.18 and 8.02, and subject to Section 2.13, the Borrower may not prepay all or any portion of the principal amount of any Fixed Rate Loan prior to the maturity thereof.

 

(c)           Upon receipt of a notice of prepayment pursuant to this Section, the Agent shall promptly notify each Bank of the contents thereof and of such Bank’s ratable share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower.

 

Section 2.12           General Provisions as to Payments.

 

(a)           The Borrower shall make each payment of principal of and interest on, the Loans and of fees hereunder, not later than 12:00 Noon (New York City time) on the date when due, in Federal or other funds immediately available in San Francisco, California, without set-off, deduction, recoupment or counterclaim, to the Agent at its address referred to in Section 9.01.  The Agent will promptly distribute to each Bank its ratable share of each such payment received by the Agent for the account of the Banks. Whenever any payment of principal of, or interest on, the Domestic Loans or of fees shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day unless such Domestic Business Day occurs after the Termination Date, in which case the date for payment

 

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thereof shall be the next preceding Domestic Business Day.  Whenever any payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month or occurs after the Termination Date, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day.  Whenever any payment of principal of, or interest on, the Money Market Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month or occurs after the Termination Date, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day.  If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time.

 

(b)           Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Banks hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank.  If and to the extent that the Borrower shall not have so made such payment, each Bank shall repay to the Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Agent, at the Federal Funds Rate.

 

Section 2.13           Funding Losses.  If the Borrower makes any payment of principal with respect to any Fixed Rate Loan (pursuant to Section 2.16, Article 6 or 8 or otherwise) on any day other than the last day of the Interest Period applicable thereto, or the last day of an applicable period fixed pursuant to Section 2.07(d), or if the Borrower fails to borrow any Fixed Rate Loans after notice has been given to any Bank in accordance with Section 2.04(a), or if any Bank shall be required to assign to any other Bank any portion of a Committed Loan pursuant to Section 2.17(b), the Borrower shall reimburse each Bank within 15 days after demand for any resulting loss or expense incurred by it (or by an existing or prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment or failure to borrow, provided that such Bank shall have delivered to the Borrower a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error.

 

Section 2.14           Computation of Interest and Fees.  Interest based on the Prime Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day).  All other interest and fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day).

 

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Section 2.15           Withholding Tax Exemption.

 

At least five Domestic Business Days prior to the first date on which interest or fees are payable hereunder for the account of any Bank, each Bank that is not incorporated under the laws of the United States of America or a state thereof agrees that it will deliver to each of the Borrower and the Agent two duly completed copies of United States Internal Revenue Service Form W-8 (including Form W-8BEN or W-8EC1), certifying in either case that such Bank is entitled to receive payments under this Agreement and its Note, if applicable, without deduction or withholding of any United States federal income taxes.  Each Bank which so delivers a Form W-8BEN or W-8EC1 further undertakes to deliver to the Agent on behalf of the Borrower two additional copies of such form (or a successor form) on or before the date that such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by the Borrower or the Agent, in each case certifying that such Bank is entitled to receive payments under this Agreement and its Notes, if applicable, without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Bank from duly completing and delivering any such form with respect to it and such Bank advises the Borrower and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax.

 

Section 2.16           Change of Control.  If a Change of Control shall occur (a) the Borrower will, within ten days after the occurrence thereof, give each Bank notice thereof and shall describe in reasonable detail the facts and circumstances giving rise thereto and (b) each Bank may, by three Domestic Business Days’ notice to the Borrower and the Agent given not later than 60 days after receipt of such notice of Change of Control, terminate its Commitment, which shall thereupon be terminated, and declare all of the outstanding Committed Loans and the Money Market Loans made by it (together with accrued interest thereon) and any other amounts payable hereunder for its account to be, and such Loans and such other amounts (including, without limitation, amounts payable under Section 2.13) shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.  For the purpose of this Section, a “Change of Control” shall occur if (i) a majority of the directors of the Borrower shall be Persons other than Persons (x) for whose election proxies shall have been solicited by the Board of Directors of the Borrower or (y) who are then serving as directors appointed by the Board of Directors to fill vacancies on the Board of Directors caused by death or resignation (but not by removal) or to fill newly-created directorships or (ii) any person or group of persons (within the meaning of Section 13 or 14 of the Exchange Act) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under the Exchange Act) of 50% or more in voting power of the outstanding Voting Stock.

 

Section 2.17           Increase in Combined Commitments.

 

(a)           The Borrower shall have the right, without the consent of the Banks, subject to the terms of this Section 2.17, to effectuate from time to time, at any time prior to the then effective Termination Date, an increase in the combined Commitments under

 

25

 

this Agreement by adding to this Agreement one or more other banks or other financial institutions reasonably acceptable to the Agent and the Borrower and qualifying as an Assignee hereunder, who shall, upon completion of the requirements of this Section 2.17 constitute “Banks” hereunder (an “Added Bank”), or by allowing one or more Banks in their sole discretion to increase their respective Commitments hereunder (each an “Increasing Bank”), so that such added and increased Commitments shall equal the increase in Commitments effectuated pursuant to this Section 2.17; provided that (i) there shall not be any increased Commitment or any added Commitment, unless the aggregate increase or addition to be effected is at least $25,000,000, (ii) no increase in or added Commitments pursuant to this Section 2.17 shall result in combined Commitments exceeding $2,750,000,000, (iii) no Bank’s Commitment shall be increased under this Section 2.17 without the consent of such Bank, and (iv) there shall not exist any Default or Event of Default immediately prior to and immediately after giving effect to such increased or added Commitment.  The Borrower shall deliver or pay, as applicable, to the Agent not later than ten Domestic Business Days prior to any such increase in Commitments each of the following items with respect to each Added Bank and Increasing Bank:

 

(i)            a written notice of Borrower’s intention to increase the combined Commitments pursuant to this Section 2.17, which shall specify each Added Bank and Increasing Bank, if any, the changes in amounts of Commitments that will result, and such other information as is reasonably requested by the Agent;

 

(ii)           documents in the form of Exhibit E or Exhibit F, as may be required by the Agent, executed and delivered by each Added Bank and each Increasing Bank, pursuant to which it becomes a party hereto or increases its Commitment, as the case may be;

 

(iii)          if requested by the applicable Bank, Notes or replacement Notes, as the case may be, executed and delivered by Borrower; and

 

(iv)          a non-refundable processing fee of $3,500 with respect to each Added Bank or Increasing Bank for the sole account of the Agent.

 

(b)           Upon receipt of any notice referred to in clause (a)(i) above, the Agent shall promptly notify each Bank thereof.  Upon execution and delivery of such documents and the payment of such fee (the “Increased Commitment Date”), each such Added Bank shall constitute a “Bank” for all purposes under this Agreement and related documents without any acknowledgment by or the consent of the other Banks, with a Commitment as specified in such documents, or such Bank’s Commitment shall increase as specified in such documents, as the case may be.  Immediately upon the effectiveness of the addition of such Added Bank or the increase in the Commitment of such Increasing Bank under this Section 2.17, (i) the respective pro rata shares of the Banks shall be deemed modified as appropriate to correspond to such changed combined Commitments, and (ii) if there are at such time outstanding any Committed Loans, each Bank whose pro rata share has been decreased as a result of the increase in the combined Commitments shall be deemed to have assigned, without recourse, to each Added Bank and Increasing

 

26

 

Bank such portion of such Bank’s Committed Loans as shall be necessary to effectuate such adjustment in pro rata shares.  Each Increasing Bank and Added Bank (x) shall be deemed to have assumed such portion of such Committed Loans and (y) shall fund to each other Bank on the Increased Commitment Date the amount of Committed Loans assigned by it to such Bank.  The Borrower agrees to pay to the Banks on demand any and all amounts to the extent payable pursuant to Section 2.13 as a result of any such prepayment of Committed Loans occasioned by the foregoing increase in Commitments and the reallocation of the pro rata shares.

 

(c)           This section shall supercede any provisions in Section 9.06(b) to the contrary.

 

Section 2.18           Extension of Termination Date.

 

(a)           Requests for Extension.  The Borrower may, by notice to the Agent, given not earlier than 60 days prior to each of the first and second anniversaries of the Effective Date hereof (each such anniversary being referred to herein as an “Anniversary Date” and each such 60 day period prior to an Anniversary Date being referred to herein as a “Request Period”), request that each Bank extend its Commitment beyond such Bank’s Termination Date then in effect (the “Existing Termination Date”) for an additional one-year period from the Existing Termination Date; provided that no more than one such request may be made during each Request Period.  The Agent shall promptly notify each Bank of the Borrower’s request for such extension (the date such notice is given being referred to herein as the “Notice Date”).

 

(b)           Bank Elections to Extend.  Each Bank, acting in its sole discretion, shall, by notice to the Agent given not later than 30 days following the Notice Date, advise the Agent whether or not such Bank agrees to such extension (each such Bank that determines not to so extend its Commitment being referred to as a “Non-Extending Bank”)).  Any Bank that does not so advise the Agent on or before the 30th day following the Notice Date (the “Response Deadline”) shall be deemed to be a Non-Extending Bank.  The election of any Bank to agree to such extension of the Termination Date shall not obligate any other Bank to so agree.

 

(c)           Notification by Agent.  The Agent shall notify the Borrower of each Bank’s determination under this Section 2.18 no later than the 5th Domestic Business Day after the Response Deadline.

 

(d)           Additional Commitment Banks.  The Borrower shall have the right on or before the related Anniversary Date to replace each Non-Extending Bank with, and add as “Banks” under this Agreement in place thereof, one or more Assignees (each, an “Additional Commitment Bank”) as provided in Section 9.06, provided that each of such Additional Commitment Banks shall enter into an Assignment and Assumption Agreement pursuant to which such Additional Commitment Bank shall undertake a Commitment (and, if any such Additional Commitment Bank is already a Bank, its Commitment shall be in addition to such Bank’s Commitment hereunder on such date).

 

27

 

(e)           Minimum Extension Requirement.  If (and only if) the total of the Commitments of the Banks that have agreed to so extend the Termination Date (each, an “Extending Bank”) and the additional Commitments of the Additional Commitment Banks shall be more than 51% of the aggregate amount of the Commitments in effect immediately prior to the related Anniversary Date, then, effective as of the related Anniversary Date (but subject to the prior satisfaction of the conditions set forth in clause (f) below), the Termination Date of this Agreement and the Termination Date with respect to the Commitments of each Extending Bank and of each Additional Commitment Bank shall be extended to the date falling one year after the Existing Termination Date (except that, if such date is not a Domestic Business Day, such Termination Date as so extended shall be the next preceding Domestic Business Day) and each Additional Commitment Bank shall thereupon become a “Bank” for all purposes of this Agreement.  Notwithstanding anything herein to the contrary, the Commitment of each Non-Extending Bank shall remain in full force and effect until and shall terminate on the Existing Termination Date for such Non-Extending Bank, unless such Non-Extending Bank is replaced prior to the related Anniversary Date by an Additional Commitment Bank as provided in clause (d) above.

 

(f)            Conditions to Effectiveness of Extensions.  Notwithstanding the foregoing, the extension of the Termination Date pursuant to this Section shall not be effective with respect to any Bank unless:

 

(i)            no Default shall have occurred and be continuing on the date of such extension and after giving effect thereto;

 

(ii)           the representations and warranties of the Borrower contained in this Agreement that are qualified by materiality are true and correct and the representations and warranties of the Borrower contained in the Agreement that are not qualified by materiality are true and correct in all material respects, in each case on and as of the date of such extension and after giving effect thereto, as though made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

 

(iii)          at the time of such extension no material adverse change has occurred since January 29, 2011 in the business, financial position or results of operations of the Borrower and its Consolidated Subsidiaries considered as a whole; and

 

(iv)          the chief financial officer, treasurer or assistant treasurer of the Borrower shall have delivered to the Agent a certificate, dated the Anniversary Date with respect to such extension, as to the matters referred to in clauses (i) through (iii) above.

 

(g)           Payment of Non-Extending Banks.  On the effective date of any extension of the Termination Date hereunder, the Borrower shall prepay any Committed Loans outstanding on such date (and pay any additional amounts required pursuant to Section

 

28

 

2.08 or 2.13) to the extent necessary to keep outstanding Committed Loans ratable with any revised pro rata allocation of the Commitments of the respective Banks effective as of such date.

 

(h)           Conflicting Provisions.  This Section shall supersede any provisions in Section 9.06 to the contrary.

 

Section 2.19           Defaulting Banks.

 

(a)           Adjustments.  Notwithstanding anything to the contrary contained in this Agreement, if any Bank becomes a Defaulting Bank, then, until such time as that Bank is no longer a Defaulting Bank, to the extent permitted by applicable Law:

 

(i)            Waivers and Amendments.  That Defaulting Bank’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 9.05.

 

(ii)           Reallocation of Payments.  Any payment of principal, interest, fees or other amounts received by the Agent for the account of that Defaulting Bank (whether voluntary or mandatory, at maturity, pursuant to Article 6 or otherwise, and including any amounts made available to the Agent by that Defaulting Bank pursuant to Section 9.04, but excluding any amounts received from the Borrower under Section 2.04(d)), shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any amounts owing by that Defaulting Bank to the Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Bank has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; third, if so determined by the Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Bank to fund Loans under this Agreement; fourth, to the payment of any amounts owing to the Banks as a result of any judgment of a court of competent jurisdiction obtained by any Bank against that Defaulting Bank as a result of that Defaulting Bank’s breach of its obligations under this Agreement; fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Bank as a result of that Defaulting Bank’s breach of its obligations under this Agreement; and sixth, to that Defaulting Bank or as otherwise directed by a court of competent jurisdiction; provided, however, notwithstanding the foregoing clauses first through sixth, if (x) such payment is a payment of the principal amount of any Loans in respect of which that Defaulting Bank has not fully funded its appropriate share and (y) such Loans were made at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting Banks on a pro rata basis prior to being applied to the payment of any Loans of that Defaulting Bank.  Any payments, prepayments or other amounts paid or payable to a Defaulting Bank that are applied (or held) to pay amounts owed by a

 

29

 

Defaulting Bank pursuant to this Section 2.19(a)(ii) shall be deemed paid to and redirected by that Defaulting Bank, and each Bank irrevocably consents hereto.

 

(iii)          Certain Fees.  That Defaulting Bank shall be entitled to receive any facility fee pursuant to Section 2.08 for any period during which that Bank is a Defaulting Bank only to extent allocable to the outstanding principal amount of Loans funded by it (and the Borrower shall not be required to pay the remaining amount of such fee that otherwise would have been required to have been paid to that Defaulting Bank).

 

(b)           Defaulting Bank Cure.  If the Borrower and the Agent agree in writing in their sole discretion that a Defaulting Bank should no longer be deemed to be a Defaulting Bank, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Bank will, to the extent applicable, purchase that portion of outstanding Loans of the other Banks or take such other actions as the Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Banks in proportion to their respective Commitments, whereupon that Bank will cease to be a Defaulting Bank; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Bank was a Defaulting Bank; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Bank to Bank will constitute a waiver or release of any claim of any party hereunder arising from that Bank’s having been a Defaulting Bank.

 

Section 2.20           Evidence of Debt.  The Loans made by each Bank shall be evidenced by one or more accounts or records maintained by such Bank and by the Agent in the ordinary course of business.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to its obligations hereunder.  In the event of any conflict between the accounts and records maintained by any Bank and the accounts and records of the Agent in respect of such matters, the accounts and records of the Agent shall control in the absence of manifest error.

 

ARTICLE 3.
 CONDITIONS

 

Section 3.01           Effectiveness.  This Agreement shall become effective on the date that each of the following conditions shall have been satisfied (or waived in accordance with Section 9.05):

 

(a)           receipt by the Agent of counterparts hereof signed by each of the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, receipt by the Agent in form satisfactory to it of telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party);

 

(b)           receipt by the Agent for the account of each Bank requesting such, of a duly executed Note dated on or before the Effective Date;

 

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(c)           receipt by the Agent of an opinion of Timothy R. Baer, Esq., General Counsel for the Borrower, substantially in the form of Exhibit G hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request;

 

(d)           receipt by the Agent of an opinion of McGuireWoods LLP, special counsel for the Agent, substantially in the form of Exhibit H hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request;

 

(e)           receipt by the Agent of evidence satisfactory to it of (i) the payment of all principal of and interest on any loans outstanding under, and of all accrued fees under the Existing Five-Year Agreement, and (ii) the satisfaction of all obligations, termination of all commitments under, and cancellation or expiration of, the Existing Five-Year Agreement;

 

(f)            receipt by the Agent of all documents it may reasonably request relating to the existence of the Borrower, the corporate authority for and the validity of this Agreement and the Notes, if any, and any other matters relevant hereto, all in form and substance satisfactory to the Agent;

 

(g)           receipt by the Agent of a certificate signed by the assistant treasurer of the Borrower certifying that since January 29, 2011 there shall not have occurred any material adverse change in the business, financial position or results of operations of the Borrower and its Consolidated Subsidiaries, considered as a whole.

 

Without limiting the generality of the provisions of Section 7.05, for purposes of determining compliance with the conditions specified in this Section 3.01, each Bank that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Bank unless the Agent shall have received notice from such Bank prior to the proposed Effective Date specifying its objection thereto.

 

Promptly after the Effective Date the Agent shall deliver to the Borrower for cancellation the promissory note of each lender under the Existing Five-Year Agreement, or, in lieu thereof, a lost note affidavit from any such lender which does not return its promissory note to the Agent.  The Agent shall promptly notify the Borrower and each Bank of the effectiveness of this Agreement, and such notice shall be conclusive and binding on all parties hereto.

 

Section 3.02           Borrowings.  The obligation of any Bank to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions:

 

(a)           receipt by the Agent of a Notice of Borrowing as required by Section 2.02 or 2.03, as the case may be;

 

(b)           the fact that, immediately after such Borrowing, the aggregate outstanding principal amount of the Loans will not exceed the aggregate amount of the Commitments;

 

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(c)           the fact that, immediately before and after such Borrowing, no Default shall have occurred and be continuing; and

 

(d)           the fact that (i) the representations and warranties of the Borrower contained in this Agreement that are qualified by materiality are true and correct, and (ii) the representations and warranties of the Borrower contained in this Agreement that are not qualified by materiality are true and correct in all material respects, in each case on and as of the date of such Borrowing (except, in the case of a Refunding Borrowing, the representations and warranties set forth in Section 4.05 as to any matter which has theretofore been disclosed in writing by the Borrower to the Banks).

 

Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in clauses (b), (c) and, to the extent applicable, (d) of this Section.

 

ARTICLE 4.
 REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants that:

 

Section 4.01           Corporate Existence and Power.  Each of the Borrower and each of its Consolidated Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where, in light of the nature of the business transacted or the property owned by it, such qualification is necessary and the failure so to qualify might permanently impair title to property material to its operations or its right to enforce a material contract against others, or expose it to substantial liability in such jurisdiction.

 

Section 4.02           Corporate and Governmental Authorization; No Contravention.  The execution, delivery and performance by the Borrower of this Agreement and the Notes, if any, are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the articles of incorporation or by-laws of the Borrower or of any agreement or instrument evidencing or governing Debt of the Borrower or any other material agreement, judgment, injunction, order, decree or other instrument binding upon the Borrower or result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.

 

Section 4.03           Binding Effect.  This Agreement constitutes a valid and binding agreement of the Borrower and the Notes, if any, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of the Borrower in each case enforceable in accordance with their respective terms, except as (i) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally and (ii) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability.

 

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Section 4.04           Financial Information.  The consolidated statements of financial position of the Borrower and its Consolidated Subsidiaries as of January 29, 2011 and the related consolidated statements of results of operations, cash flows and shareholders’ investment for the fiscal year then ended, reported on by Ernst & Young, LLP and set forth in the Borrower’s Form 10-K for the fiscal year then ended, a copy of which has been delivered to each of the Banks, fairly present, in conformity with generally accepted accounting principles, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year.

 

Section 4.05           Litigation.  There is no action, suit or proceeding pending against, or to the knowledge of the Borrower threatened against or affecting, the Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official which might reasonably be expected to materially adversely affect the business, consolidated financial position or consolidated results of operations of the Borrower and its Consolidated Subsidiaries or which in any manner draws into question the validity of this Agreement or any Note.

 

Section 4.06           Compliance with ERISA.  The Borrower and each Subsidiary has fulfilled its obligations, if any, under the minimum funding standards of ERISA with respect to each Plan maintained by it and is otherwise in compliance in all material respects with the applicable provisions of ERISA.

 

Section 4.07           Payment of Taxes.  United States Federal income tax returns of the Borrower and its Subsidiaries have been examined and closed through the fiscal year ended January 30, 2010.  The Borrower and its Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which, to the best of the Borrower’s knowledge, are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any Subsidiary, except for any such taxes which are being contested in good faith by appropriate proceedings and against which the Borrower in its judgment has set aside adequate reserves in accordance with generally accepted accounting principles.

 

Section 4.08           Full Disclosure.  All information heretofore furnished by the Borrower to the Agent or any Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Borrower to the Agent or any Bank will be, true and accurate in all material respects on the date as of which such information is stated or certified.

 

ARTICLE 5.
 COVENANTS

 

The Borrower agrees that, so long as any Bank has any Commitment hereunder or any Loan or other amounts hereunder shall remain unpaid:

 

Section 5.01           Information.  The Borrower will deliver to each of the Banks:

 

(a)           as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, a consolidated statement of financial position of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the

 

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related consolidated statements of results of operations, cash flows and shareholders’ investment for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by Ernst & Young, LLP or other Registered Public Accounting Firm of recognized national standing selected by the Borrower (the “Auditor”) or other independent public accountants of nationally recognized standing;

 

(b)           as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a consolidated statement of financial position of the Borrower and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of results of operations and cash flows for such quarter and for the portion of the Borrower’s fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Borrower’s previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of the Borrower;

 

(c)           within 15 days after the delivery of each set of financial statements referred to in clauses (a) and (b)) above, a certificate of the chief financial officer or the chief accounting officer of the Borrower (i) setting forth in reasonable detail the calculations required to establish whether the Borrower was in compliance with the requirements of Sections 5.07 to 5.08, inclusive, on the date of such financial statements and (ii) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto;

 

(d)           within 15 days after the delivery of each set of financial statements referred to in clause (a) above, a statement of the Auditor which reported on such statements whether anything has come to their attention to cause them to believe that any Default existed on the date of such statements with respect to Sections 5.07 and 5.08 hereof;

 

(e)           within 15 days after any officer of the Borrower obtains knowledge of any Default, if such Default is then continuing, a certificate of the chief financial officer or the chief accounting officer of the Borrower setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto;

 

(f)            within 15 days after the mailing thereof to the shareholders of the Borrower generally, copies of all financial statements, reports and proxy statements so mailed;

 

(g)           within 15 days after the filing thereof copies of all reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower shall have filed with the Securities and Exchange Commission or any governmental authority succeeding to any of its functions;

 

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(h)           written notice setting forth the facts and relevant information if and when the Borrower or any Subsidiary (i) fails to fulfill their obligations, if any, under the minimum funding standards of ERISA with respect to any Plan; (ii) engages in any material nonexempted “prohibited transaction” as defined in Sections 406 and 408 of ERISA and Section 4975 of the Internal Revenue Code; (iii) fails to comply with the Pension Funding Rules; (iv) terminates or permits the termination of any “employee pension benefit plan,” as defined in Section 3 of ERISA and covered by Title IV of ERISA or subject to the minimum funding standards of Section 412 of the Internal Revenue Code; or (v) engages in a “withdrawal” or “partial withdrawal,” as defined in Section 4203 or 4205 of ERISA from a “multiemployer plan,” as defined in Section 4001(a)(3) of ERISA;

 

(i)            promptly following, and in any event within ten days of any change in a Debt Rating by any Rating Agency, notice thereof; and

 

(j)            from time to time such additional information regarding the financial position or business of the Borrower and its Subsidiaries as the Agent, at the request of any Bank, may reasonably request.

 

As to any information contained in materials furnished pursuant to Section 5.01(g), the Borrower shall not be separately required to furnish such information under clause (a) or (b) above.  Notwithstanding the foregoing, the Borrower shall remain obligated to furnish the information and materials described in clauses (a) and (b) above at the times specified therein.

 

The Borrower hereby acknowledges that (a) the Agent and/or the Arrangers will make available to the Banks materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks, Syndtrak and/or another similar electronic system (the “Platform”) and (b) none of the Banks will be “public-side” Banks (i.e., Banks that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “Public Lender”).  The Borrower hereby agrees that (w) no Borrower Materials are to be made available to Public Lenders, (x) all Borrower Materials shall be treated as private and may contain material non-public information with respect to the Borrower or its securities for purposes of United States federal and state securities laws; and (y) the Agent and the Arrangers shall treat all Borrower Materials as being suitable only for posting on a portion of the Platform not designated “Public Investor”.  Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC”.

 

Section 5.02           Maintenance of Property.  The Borrower will keep, and will cause each Subsidiary to keep, all material property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted, except where the failure to do so would not reasonably be expected to have a material adverse effect on the business, financial position or results of operations of the Borrower and its Subsidiaries taken as a whole.

 

Section 5.03           Conduct of Business and Maintenance of Existence.  Except as permitted by Section 5.05, the Borrower will continue, and will cause each Significant Subsidiary to continue, to engage in business of the same general type as now conducted by the Borrower and

 

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its Significant Subsidiaries, and will preserve, renew and keep in full force and effect, and will cause each Significant Subsidiary to preserve, renew and keep in full force and effect its respective corporate existence and its respective rights, privileges and franchises necessary or desirable in the normal conduct of business; provided that, neither the Borrower nor any Significant Subsidiary shall be required to preserve any such right, privilege or franchise if the Borrower shall determine in good faith (a) that the preservation thereof is no longer desirable in the conduct of the business of the Borrower or any Significant Subsidiary or (b) the loss thereof will not be disadvantageous in any material respect to the Borrower.

 

Section 5.04           Compliance with Laws.  Except where the failure to do so would not reasonably be expected to have a material adverse effect on the business, financial position or results of operations of the Borrower and its Subsidiaries taken as a whole, the Borrower will comply, and cause each of its Subsidiaries to comply, in all material respects with all applicable laws, rules, regulations and orders where material to the assets or operations of the Borrower or any such Subsidiary, such compliance to include, without limitation, paying before the same become delinquent all taxes, fees, assessments and other governmental charges imposed upon it or upon its property except to the extent any such taxes, fees, assessments or other governmental charges are being contested in good faith by appropriate proceedings and adequate reserves in the judgment of the Borrower therefor have been established on the books of such Person in accordance with generally accepted accounting principles.

 

Section 5.05           Consolidations, Mergers and Sale of Assets.  The Borrower will not (a) dissolve or liquidate, (b) merge with or into, or consolidate with, any other Person, (c) dissolve or liquidate any Subsidiary or permit the merger or consolidation of any Subsidiary into or with any other Person unless the Borrower shall determine in good faith (i) that any such transaction is in the best interests of the Borrower or (ii) such transaction will not be disadvantageous in any material respect to the Borrower, or (d) sell, convey or transfer all or substantially all of its property and assets to any other Person; provided, however, that (x) any Person may be merged with or into, or consolidated with, the Borrower if the Borrower is the surviving corporation, and (y) the Borrower may merge with or into, or consolidate with, another corporation or sell, convey or transfer its properties and assets substantially as an entity to any Person if the corporation formed by such consolidation or into which the Borrower is merged, or the Person which acquires by sale, conveyance or transfer the properties and assets of the Borrower substantially as an entity, shall be a corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia, and shall expressly assume by a supplemental agreement hereto, executed and delivered to the Agent in form satisfactory to the Agent, the full and timely performance and observance of every covenant and agreement contained herein, including but not limited to the payment of the principal and interest provided herein, on the part of the Borrower to be performed or observed, in each case if immediately after giving effect to such merger, consolidation, sale, conveyance or transfer, no Default would occur and be continuing.

 

Section 5.06           Dividends.  The Borrower will not, and will not permit any Subsidiary to, declare or pay any dividends, purchase or otherwise acquire for value any of its capital stock now or hereafter outstanding, or make any distribution of assets to its stockholders as such, or permit any of its Subsidiaries to purchase or otherwise acquire for value any of the capital stock of the Borrower, if any such action would result in a breach of a covenant or agreement

 

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contained in, or default under, or constitute an event of default under, any other agreement then in effect between the Borrower and any Person relating to indebtedness for money borrowed.

 

Section 5.07           Negative Pledge.  The Borrower will not permit, at the end of any fiscal quarter, the aggregate amount of Debt of the Borrower and its Consolidated Subsidiaries, determined on a consolidated basis, secured by Liens (other than (a) Liens on Accounts Receivable and (b) any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring or constructing such asset, provided that such Lien attaches to such asset concurrently or within 120 days after the acquisition or completion of construction thereof) to exceed 20% of Consolidated Tangible Net Worth.

 

Section 5.08           Leverage Ratio.  The Borrower will not, at the end of any fiscal quarter of the Borrower, permit the ratio of (a) Total Finance Liabilities to (b) Total Capitalization to be greater than or equal to 3.0:4.0.

 

Section 5.09           Use of Proceeds.  The proceeds of the Loans made under this Agreement will be used, directly or indirectly, by the Borrower for its general corporate purposes and as a commercial paper backup facility.  None of such proceeds will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any “margin stock” within the meaning of Regulation U.

 

ARTICLE 6.
 DEFAULTS

 

Section 6.01           Events of Default.  If one or more of the following events (“Events of Default”) shall have occurred and be continuing:

 

(a)           the Borrower shall fail to pay when due any principal of any Loan, or shall fail to pay within five Domestic Business Days of the due date thereof any interest on any Loan, any fees or any other amount payable hereunder;

 

(b)           the Borrower shall fail to observe or perform any covenant contained in Sections 5.05 through 5.09, inclusive;

 

(c)           the Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a) or (b) above) for 30 days after written notice thereof has been given to the Borrower by the Agent at the request of any Bank;

 

(d)           any representation, warranty, certification or statement made by the Borrower in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made (or deemed made);

 

(e)           the Borrower or any of its Subsidiaries shall fail to make any payment of principal or interest in respect of any Material Debt when due or within any applicable grace period;

 

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(f)            any event or condition shall occur which results in the acceleration of the maturity of any Material Debt or enables the holder of such Material Debt or any Person acting on such holder’s behalf to accelerate the maturity thereof;

 

(g)           the Borrower or any of its Significant Subsidiaries shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing;

 

(h)           an involuntary case or other proceeding shall be commenced against the Borrower or any of its Significant Subsidiaries seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Borrower or any Significant Subsidiary under the federal bankruptcy laws as now or hereafter in effect;

 

(i)            The Borrower or any Subsidiary shall (i) engage in any nonexempted “prohibited transaction,” as defined in Sections 406 and 408 of ERISA and Section 4975 of the Internal Revenue Code, (ii) fail to comply with the Pension Funding Rules, (iii) terminate or permit the termination of any “employee pension benefit plan,” as defined in Section 3 of ERISA, in a manner which shall result in the imposition of a Lien on the property of the Borrower or such Subsidiary pursuant to Section 4068 of ERISA or (iv) engage in a “withdrawal” or “partial withdrawal,” as defined in Section 4203 or 4205 of ERISA, from a “multiemployer plan,” as defined in Section 4001(a)(3) of ERISA, provided that no occurrence described in this Section 6.01(i) shall constitute an Event of Default unless the aggregate outstanding liability of the Borrower and its Subsidiaries which has resulted from all such occurrences, plus the aggregate outstanding amount secured by all such Liens shall exceed $100,000,000 (or its equivalent in any other currency); or

 

(j)            a judgment or order for the payment of money in excess of $100,000,000 shall be rendered against the Borrower or any of its Subsidiaries and such judgment or order shall continue unsatisfied and unstayed for a period of 10 days;

 

then, and in every such event, the Agent shall, if requested by the Required Banks, (i) by notice to the Borrower terminate the Commitments and they shall thereupon terminate, and (ii) by notice to the Borrower declare the unpaid principal amount of all outstanding Loans (together with accrued interest thereon and all other fees pursuant to Section 2.08 or 2.13 owing or payable hereunder) to be, and the unpaid principal amount of all outstanding Loans shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of

 

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any kind, all of which are hereby waived by the Borrower; provided that in the case of any of the Events of Default specified in clause (g) or (h) above with respect to the Borrower, without any notice to the Borrower or any other act by the Agent or the Banks, the Commitments shall thereupon terminate and the unpaid principal amount of all outstanding Loans (together with accrued interest thereon and all other fees pursuant to Section 2.08 or 2.13 owing or payable hereunder) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

 

Section 6.02           Notice of Default.  The Agent shall give notice to the Borrower under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof.

 

ARTICLE 7.
 THE AGENT, THE CO-DOCUMENTATION AGENTS
 AND THE SYNDICATION AGENT

 

Section 7.01           Appointment and Authorization.  Each Bank irrevocably appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the Notes, if any, as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto.

 

Section 7.02           Agent and Affiliates.  Except as provided in Section 2.03(d), Bank of America shall have the same rights and powers under this Agreement as any other Bank and may exercise or refrain from exercising the same as though it were not the Agent, and Bank of America and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or affiliate of the Borrower as if it were not the Agent hereunder.  The Banks acknowledge that, pursuant to such activities, Bank of America or its affiliates may receive information regarding the Borrower or its affiliates (including information that may be subject to confidentiality obligations in favor of the Borrower or such affiliate) and acknowledge that the Agent shall be under no obligation to provide such information to them.  With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Bank and may exercise such rights and powers as though it were not the Agent, and the terms “Bank” and “Banks” include Bank of America in its individual capacity.

 

Section 7.03           Action by Agent.  The obligations of the Agent hereunder are only those expressly set forth herein, and the Agent shall not be a trustee or fiduciary for any Bank; the term “Agent” is used solely as a matter of market custom to connote an administrative relationship among independent contracting parties.  Without limiting the generality of the foregoing, the Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article 6.

 

Section 7.04           Consultation with Experts.  The Agent may consult with legal counsel (who may be counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.

 

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Section 7.05           Liability of Agent.  Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection herewith (a) with the consent or at the request of the Required Banks or all Banks, as the case may be, or (b) in the absence of its own gross negligence or willful misconduct and in no event shall any such Person be liable for special, consequential, punitive or indirect damages.  Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of the Borrower; (iii) the satisfaction of any condition specified in Article 3, except receipt of items required to be delivered to the Agent; or (iv) the validity, enforceability, effectiveness, genuineness or sufficiency of this Agreement, the Notes, if any, or any other instrument or writing furnished in connection herewith.  Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be required to initiate or conduct any litigation or collection proceedings under this Agreement or the Notes, if any.  The Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties.

 

Section 7.06           Indemnification.  Each Bank shall, ratably in accordance with its Commitment (determined at the time such indemnification is sought), indemnify the Agent, its affiliates and their respective directors, officers, agent and employees (to the extent not reimbursed by the Borrower) from and against all Indemnified Liabilities, as defined in Section 9.03(b) (except such as result from such indemnitees’ gross negligence or willful misconduct; provided, however, that no action taken in accordance with directions of the Required Banks or, in the case of an action expressly requiring the consent of all of the Banks, with the directions of all of the Banks, shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section), that such indemnitees may suffer or incur in connection with this Agreement or as a result of any action taken or omitted by such indemnitees hereunder.  Without limitation of the foregoing, each Bank shall reimburse the Agent upon demand for its ratable share (determined at the time such reimbursement is sought) of any costs or out-of-pocket expenses (including reasonable fees and expenses of counsel, including the allocated costs of internal legal services) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any document contemplated by or referred to herein, to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Borrower.  The undertaking in this Section shall survive termination of the Commitments, the repayment of all Loans and the resignation of the Agent.

 

Section 7.07           Credit Decision.  Each Bank acknowledges that it has, independently and without reliance upon the Agent, any Co-Documentation Agent, the Syndication Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Bank also acknowledges that it will, independently and without reliance upon the Agent, any Co-Documentation Agent, the Syndication Agent or any other Bank, and based on such documents and information as it

 

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shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement.

 

Section 7.08           Successor Agent.  The Agent may resign at any time by giving notice thereof to the Banks and the Borrower.  Upon any such resignation, the Required Banks shall have the right to appoint a successor Agent.  If no successor Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within 30 days after the retiring Agent gives notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000.  Upon the acceptance of its appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Agent, and the retiring Agent shall thereafter be discharged from its duties and obligations hereunder.  After any retiring Agent’s resignation hereunder as Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent.

 

Section 7.09           Agent’s Fee.  The Borrower shall pay to the Agent for its own account fees in the amounts and at the times previously agreed upon between the Borrower and the Agent.

 

Section 7.10           Co-Documentation Agents and Syndication Agent.  Nothing in this Agreement shall impose on any Co-Documentation Agent or Syndication Agent, in its capacity as such, any duties or obligations whatsoever, nor shall any Co-Documentation Agent or Syndication Agent, in its capacity as such be deemed to have any fiduciary relationship with any Bank.

 

Section 7.11           Defaults.  The Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or Event of Default unless the Agent has received written notice from a Bank or the Borrower specifying such Default or Event of Default and stating that such notice is a “Notice of Default”.  In the event that the Agent receives such a notice of the occurrence of a Default or Event of Default, the Agent shall give prompt notice thereof to the Banks.  The Agent shall (subject to Section 7.05 hereof) take such action with respect to such Default or Event of Default as shall reasonably be directed by the Required Banks, provided that, unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interest of the Banks.

 

ARTICLE 8.
 CHANGE IN CIRCUMSTANCES

 

Section 8.01           Basis for Determining Interest Rate Inadequate or Unfair.  If on or prior to the first day of any Interest Period for any Fixed Rate Borrowing:

 

(a)           the Agent is advised by the Reference Banks that deposits in dollars (in the applicable amounts) are not being offered to the Reference Banks in the relevant market for such Interest Period, or

 

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(b)           the Agent determines (which determination shall be conclusive) that by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the interest rate for Euro-Dollar Loans for such Interest Period; or

 

(c)           in the case of a Committed Borrowing, Banks having 50% or more of the aggregate amount of the Commitments advise the Agent that the Adjusted CD Rate or the Adjusted London Interbank Offered Rate, as the case may be, as determined by the Agent will not adequately and fairly reflect the cost to such Banks of funding their CD Loans or Euro-Dollar Loans, as the case may be, for such Interest Period;

 

the Agent shall forthwith give notice thereof to the Borrower and the Banks, whereupon until the Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the obligations of the Banks to make CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended.  Unless the Borrower notifies the Agent at least one Domestic Business Day before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a Base Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate for such day.

 

Section 8.02           Illegality.  If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof or compliance by any Bank (or its Euro-Dollar Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Bank shall so notify the Agent, the Agent shall forthwith give notice thereof to the other Banks and the Borrower, whereupon until such Bank notifies the Borrower and the Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make Euro-Dollar Loans shall be suspended.  Before giving any notice to the Agent pursuant to this Section, such Bank shall designate a different Euro-Dollar Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank.  If such Bank shall determine that it may not lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans to maturity and shall so specify in such notice, the Borrower shall immediately prepay in full the then outstanding principal amount of each such Euro-Dollar Loan, together with accrued interest thereon.  Concurrently with prepaying each such Euro-Dollar Loan, the Borrower shall, subject to Section 2.01, borrow a Base Rate Loan in an equal principal amount from such Bank (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Banks), and such Bank shall make such a Base Rate Loan.

 

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Section 8.03           Increased Cost and Reduced Return.

 

(a)           If on or after (x) the date hereof in the case of any Committed Loan or any obligation to make Committed Loans or (y) the date of the related Money Market Quote, in the case of any Money Market Loan, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof or compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency :

 

(i)            shall subject any Bank (or its Applicable Lending Office) to any tax, duty or other charge with respect to its Fixed Rate Loans, its Note, if any, or its obligation to make Fixed Rate Loans, or shall change the basis of taxation of payments to any Bank (or its Applicable Lending Office) of the principal of or interest on its Fixed Rate Loans or any other amounts due under this Agreement in respect of its Fixed Rate Loans or its obligation to make Fixed Rate Loans (except for changes in the rate of tax on the overall net income of such Bank or its Applicable Lending Office imposed by the jurisdiction in which such Bank’s principal executive office or Applicable Lending Office is located); or

 

(ii)           shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding (A) with respect to any CD Loan any such requirement included in an applicable Domestic Reserve Percentage and (B) with respect to any Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar Reserve Percentage), special deposit, insurance assessment (excluding, with respect to any CD Loan, any such requirement reflected in an applicable Assessment Rate) or similar requirement against assets of deposits with or for the account of or credit extended by, any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its Applicable Lending Office) or on the United States market for certificates of deposit or the London interbank market any other condition affecting its Fixed Rate Loans, its Note, if any, or its obligation to make Fixed Rate Loans;

 

and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or under its Note, if any, with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank (with a copy to the Agent), the Borrower shall pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction.

 

(b)           If any Bank shall have determined that, after the date hereof the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof 

 

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by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of such Bank (or its Parent) as a consequence of such Bank’s obligations hereunder to a level below that which such Bank (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after demand by such Bank (with a copy to the Agent), the Borrower shall pay to such Bank such additional amount or amounts as will compensate such Bank (or its Parent) for such reduction.

 

(c)           Notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a change in law contemplated by the foregoing clauses (a) and (b) of this Section 8.03, regardless of the date enacted, adopted or issued.

 

(d)           Each Bank will promptly notify the Borrower and the Agent of any event of which it has knowledge, occurring after the date hereof which will entitle such Bank to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of such compensation and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods.

 

Section 8.04           Base Rate Loans Substituted for Affected Fixed Rate Loans.  If (a) the obligation of any Bank to make, maintain or convert to Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (b) any Bank has demanded compensation under Section 8.03 and the Borrower shall, by at least five Euro-Dollar Business Days’ prior notice to such Bank through the Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist:

 

(a)           all Loans which would otherwise be made, maintained or converted by such Bank as CD Loans or Euro-Dollar Loans, as the case may be, shall be made, maintained or converted instead as Base Rate Loans (on which interest and principal shall be payable contemporaneously with the related Fixed Rate Loans of the other Banks), and

 

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(b)           after each of its CD Loans or Euro-Dollar Loans, as the case may be, has been repaid or converted, all payments of principal which would otherwise be applied to repay such Fixed Rate Loans shall be applied to repay its Base Rate Loans instead.

 

ARTICLE 9.
 MISCELLANEOUS

 

Section 9.01           Notices.  All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: (a) in the case of the Borrower or the Agent, at its address, facsimile number (if any) set forth on the signature pages hereof, (b) in the case of any Bank, at its address, facsimile number set forth in its Administrative Questionnaire or (c) in the case of any party, such other address, facsimile number as such party may hereafter specify for the purpose by notice to the Agent and the Borrower.  Each such notice, request or other communication shall be effective (i) if given by mail, upon receipt, (ii) if given by facsimile transmission, when such facsimile is transmitted to the facsimile number specified in this Section and receipt of such facsimile is confirmed, either orally or in writing by return facsimile to the transmitting party at the facsimile number specified in this Section, by the party receiving such transmission, or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Agent under Article 2 or Article 8 shall not be effective until received.

 

Notwithstanding any other provision of this Section 9.01, in the case of any communication required by Section 5.01, in addition to the methods of delivery described above, any such communication may be made by the posting of such financial statements, reports, officer’s certificates or other information to an Internet website established by the Agent with IntraLinks, Inc., Syndtrak and/or other similarly available electronic media (a “Posting Website”) or, in the case of information required under Sections 5.01(a), (b), (f) and (g) only, by the posting on the Posting Website of the universal resource locator (URL) where such information may be obtained.  Upon the initial establishment of the Posting Website, the Agent shall give notice to each Bank of the URL for the Posting Website in writing by mail or facsimile transmission as described above.  Each communication made by the Borrower pursuant to the second preceding sentence shall be deemed to have been delivered when the information contained therein is posted to the Posting Website.

 

Section 9.02           No Waivers; Enforcement.  No failure or delay by the Agent or any Bank in exercising any right, power or privilege hereunder or under any Note shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.  Notwithstanding anything to the contrary contained herein or in any other document, instrument or agreements evidencing, securing or relating to this Agreement (together with this Agreement, collectively, the “Loan Documents”), the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Borrower shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Agent in accordance with Section 6.02 for the benefit of all the Banks; provided, however, that the foregoing shall not prohibit (a) the Agent from exercising on

 

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its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Agent) hereunder and under the other Loan Documents, (b) any Bank from exercising setoff rights in accordance with Section 9.04, or (c) any Bank from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a bankruptcy or insolvency proceeding relative to the Borrower.

 

Section 9.03           Expenses; Documentary Taxes; Indemnification.

 

(a)           The Borrower shall pay (i) all reasonable out-of-pocket expenses of the Agent, including reasonable fees and disbursements of special counsel for the Agent, in connection with the preparation of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all reasonable out-of-pocket expenses incurred by the Agent and each Bank, including reasonable fees and disbursements of counsel, in connection with such Event of Default and collection, bankruptcy, insolvency, and other enforcement proceedings resulting therefrom.  The Borrower shall indemnify each Bank against any transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution and delivery of this Agreement or the Notes, if any.

 

(b)           The Borrower agrees to indemnify the Agent and each Bank, their respective affiliates and the respective directors, officers, agents, attorneys and employees of the foregoing (each an “Indemnitee”) and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) relating to or arising out of this Agreement or any actual or proposed use of proceeds of Loans hereunder (the “Indemnified Liabilities”); provided that no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee’s own gross negligence or willful misconduct.  No Indemnitee shall be liable for any damages arising from the use by others of information or other materials obtained through internet, Posting Website or other similarly available electronic media in connection with the electronic posting of financial statements, certificates, reports or other information to a Posting Website as provided for in Section 9.01 hereof unless such Indemnitee has engaged in gross negligence or willful misconduct.

 

Section 9.04           Sharing of Set-Off.  Each Bank agrees that if it shall, by exercising any right of set-off, recoupment, counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest then due with respect to any Loans held by it which is greater than the proportion received by any other Bank in respect of the aggregate amount of principal and interest then due with respect to any Loans held by such other Bank, the Bank receiving such proportionately greater payment (the “Benefited Bank”) shall purchase such participations in the Loans held by the other Banks, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Loans held by the Banks shall be shared by the Banks pro rata; provided, however, that if all or any portion of such excess payment is thereafter recovered from such Benefited Bank or is repaid in whole or in part by such Benefited Bank in good faith settlement of a pending or threatened avoidance

 

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claim, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery or settlement payment, but without interest; further  provided that nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower other than its indebtedness under this Agreement. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Loan, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation.  Notwithstanding the foregoing, in the event that any Defaulting Bank shall exercise any such right of setoff, recoupment, counterclaim or otherwise, (x) all amounts so set off shall be paid over immediately to the Agent for further application in accordance with the provisions of Section 2.19 and, pending such payment, shall be segregated by such Defaulting Bank from its other funds and deemed held in trust for the benefit of the Agent and the Banks, and (y) the Defaulting Bank shall provide promptly to the Agent a statement describing in reasonable detail the obligations under this Agreement owing to such Defaulting Bank as to which it exercised such right of setoff, recoupment, counterclaim or otherwise.

 

Section 9.05           Amendments and Waivers.  Any provision of this Agreement or the Notes, if any, may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Required Banks (and, if the rights or duties of the Agent are affected thereby, by the Agent); provided that no such amendment or waiver shall: (a) increase, decrease or extend the Commitment of any Bank (except for (i) a ratable decrease in the Commitments of all Banks, (ii) any increase in Commitments made pursuant to, and in compliance with, Sections 2.17 and 2.18, as applicable, and (iii) any extension made pursuant to, and in compliance with, Section 2.18) or subject any Bank to any additional obligation, without the written consent of such Bank; (b) reduce the principal of or rate of interest on any Loan or any fees or margins hereunder (subject to the second proviso to this Section 9.05), without the written consent of each Bank directly affected thereby (provided, however, that only the consent of the Required Banks shall be necessary (i) to amend the rate payable as default interest hereunder or to waive any obligation of the Borrower to pay interest at such default rate, or (ii) to amend Section 5.07 or 5.08 (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or to reduce any fee payable hereunder); (c) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder or for the Termination Date (except pursuant to, and in compliance with Section 2.18 hereof), without the written consent of each Bank directly affected thereby; (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans, or the number of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement, without the written consent of each Bank; (e) consent to the assignment or transfer by the Borrower of any of its rights or obligations under this Agreement, without the written consent of each Bank; or (f) amend, modify or waive Section 9.04 or this Section 9.05 without the written consent of each Bank; provided further, however, that the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary herein, no Defaulting Bank shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Banks or each affected Bank may be effected with the consent

 

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of the applicable Banks other than Defaulting Banks), except that (x) the Commitment of any Defaulting Bank may not be increased or extended without the consent of such Bank and (y) any waiver, amendment or modification requiring the consent of all Banks or each affected Bank that by its terms affects any Defaulting Bank disproportionately adversely relative to other affected Banks shall require the consent of such Defaulting Bank.

 

Section 9.06           Successors and Assigns.

 

(a)           The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Agent and each Bank, and no Bank may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Assignee in accordance with the provisions of subsection (c) and (d) of this Section, (ii) by way of participation in accordance with the provisions of subsection (b) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) or (g) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (b) of this Section and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)           Any Bank may at any time grant to one or more banks, Approved Funds or other institutions (other than a Defaulting Bank or any of its Subsidiaries, or any Person who, upon becoming a Bank hereunder, would constitute a Defaulting Bank) (each a “Participant”) participating interests in its Commitment or any or all of its Loans.  In the event of any such grant by a Bank of a participating interest to a Participant, whether or not upon notice to the Borrower and the Agent, such Bank shall remain responsible for the performance of its obligations hereunder, and the Borrower and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank’s rights and obligations under this Agreement.  Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Borrower hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement described in clause (a), (b) or (c) of Section 9.05 without the consent of the Participant.  The Borrower agrees that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article 8 with respect to its participating interest. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b).

 

(c)           Any Bank may at any time assign to one or more banks, Approved Funds or other institutions (other a Defaulting Bank or any of its Subsidiaries, or any Person

 

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who, upon becoming a Bank hereunder, would constitute a Defaulting Bank) (each an “Assignee”) all, or a proportionate part of all, of its rights and obligations under this Agreement and its Notes, if any, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit I hereto (an “Assignment and Assumption Agreement”) executed by such Assignee and such transferor Bank, with and subject to the subscribed consents of the Agent and (so long as an Event of Default has not occurred and is continuing) the Borrower, which consents shall not be unreasonably withheld or delayed; provided that (i) such assignment may, but need not, include rights of the transferor Bank in respect of outstanding Money Market Loans and (ii) no interest may be assigned by a Bank pursuant to this subsection (c) in an amount less than $15,000,000 unless (A) such lesser amount constitutes all of such assigning Bank’s Commitment, or (B) the Agent and (so long as an Event of Default has not occurred and is continuing) the Borrower, in its sole discretion, otherwise consent to a lesser amount. Notwithstanding the foregoing, if an Assignee is an affiliate of a Bank or a Bank, (x) the subscribed consents of the Borrower and the Agent shall not be required and (y) the limitations set forth in clause (ii) above shall not be applicable.  In all cases, any assignment to any Approved Fund requires the consent of the Borrower, which shall not be unreasonably withheld or delayed. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Bank of an amount equal to the purchase price agreed between such transferor Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights and obligations of a Bank with a Commitment as set forth in such instrument of assumption, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent (and, in the case of an assignment covering all of the assigning Bank’s rights and obligations under this Agreement, such Bank shall cease to be a party hereto) and no further consent or action by any party shall be required, but the transferor Bank shall continue to be entitled to the benefits of Article 8 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Upon the consummation of any assignment pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower shall make appropriate arrangements so that, if required, a new Note is issued to the Assignee.  Except as otherwise provided herein, in connection with any such assignment, the transferor Bank shall pay to the Agent an administrative fee for processing such assignment in the amount of $3,500, unless waived by the Agent in its sole discretion.  If the Assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to the Borrower and the Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 2.15.

 

The Agent, acting solely for this purpose as an Agent of the Borrower (and such agency being solely for tax purposes), shall maintain at the Agent’s principal office a copy of each Assignment and Assumption Agreement delivered to it and a register for the recordation of the names and addresses of the Banks, and the Commitments of, and principal amounts of the Loans owing to, each Bank pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register as to the identity of the Banks and their respective Commitments shall be conclusive absent manifest error, and the Borrower, the Agent and the Banks may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Bank hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  In addition, the Agent

 

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shall maintain on the Register information regarding the designation, and revocation of designation, of any Bank as a Defaulting Bank.  The Register shall be available for inspection by the Borrower and any Bank, at any reasonable time and from time to time upon reasonable prior notice.  In addition, at any time that a request for a consent for a material or substantive change to this Agreement is pending, any Bank wishing to consult with other Banks in connection therewith may request and receive from the Agent a copy of the Register.

 

(d)           In connection with any assignment of rights and obligations of any Defaulting Bank hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Bank, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Bank to the Agent or any Bank hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans in proportion to its Commitment. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Bank hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Bank for all purposes of this Agreement until such compliance occurs.

 

(e)           Any Bank may at any time assign all or any portion of its rights under this Agreement and its Note, if any, to a Federal Reserve Bank.  No such assignment shall release the transferor Bank from its obligations hereunder.

 

(f)            No Assignee, Participant or other transferee of any Bank’s rights shall be entitled to receive any greater payment under Section 8.03 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Borrower’s prior written consent or by reason of the provisions of Section 8.02 or 8.03 requiring such Bank to designate a different Applicable Lending Office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist.

 

(g)           Notwithstanding anything to the contrary contained herein, any Bank that is an Approved Fund may create a security interest in all or any portion of the Loans owing to it and the Note, if any, held by it to the trustee for the holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities, provided that unless and until such trustee actually becomes a Bank in compliance with the other provisions of Section 9.06(c), (i) no such pledge shall release the pledging Bank from any of its obligations under this Agreement and (ii) such trustee shall not be entitled to exercise any of the rights of a Bank under this Agreement, including but not limited to rights to approve amendments, waivers or other modifications of any provision of this Agreement, even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise.

 

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(h)           The words “execution”, “signed”, “signature”, and words of like import in any Assignment and Assumption Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

Section 9.07           Collateral.  Each of the Banks represents to the Agent and each of the other Banks that it in good faith is not relying upon any “margin stock” (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement.

 

Section 9.08           Replacement of Banks.  (a)  If any Bank requests compensation under Section 8.03, or if the obligation of any Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02, or if any Bank is a Defaulting Bank, or if any Bank is a Non-Extending Bank for any extension of the Termination Date, then the Borrower may, at its sole expense and effort, upon notice to such Bank and the Agent, require such Bank to assign and delegate without unreasonable delay, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.06), all of its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Bank, if a Bank accepts such assignment), provided that:

 

(i)            the Borrower shall have paid to the Agent the assignment fee specified in Section 9.06(c) (except as otherwise provided herein); provided that any Defaulting Bank shall pay to the Agent the assignment fee specified in Section 9.06(c);

 

(ii)           such Bank shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder (including any amounts under Section 2.13) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

 

(iii)          in the case of any such assignment resulting from a claim for compensation by a Bank under Section 8.03, such assignment will result in a reduction in such compensation or payments that would otherwise result thereafter; and

 

(iv)          such assignment does not conflict with applicable laws.

 

A Bank shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Bank or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

(b)           In the event any Bank fails to approve any amendment, waiver or consent requested by the Borrower pursuant to Section 9.05 that has received the written approval of not less than the Required Banks but also requires the approval of such Bank (any such

 

51

 

Bank, a “Restricted Bank”), so long as no Default or Event of Default shall have occurred and be continuing and the Borrower has obtained a commitment (in an amount not less than the entire amount of such Restricted Bank’s Commitment) from one or more Banks or Assignees to become a Bank for all purposes hereunder (such Bank or Banks referred to as the “Replacement Bank”), the Borrower may cause such Restricted Bank to be replaced by, and to assign all its rights and obligations under this Agreement (including its Commitment and its outstanding Loans) pursuant to Section 9.06 to, such Replacement Bank.  Such Restricted Bank agrees to execute and to deliver to the Agent one or more Assignment and Assumption Agreements with such Replacement Bank as provided in Section 9.06 upon payment at par of all principal, accrued interest, accrued fees and other amounts accrued or owing under this Agreement to such Restricted Bank, and such Replacement Bank shall pay to the Agent the assignment fee specified in Section 9.06(c) in connection with such assignment.  The Restricted Bank making such assignment will be entitled to compensation for any expenses or other amounts which would be owing to such Restricted Bank pursuant to any indemnification provision hereof (including, if applicable, Section 2.13) as if the Borrower had prepaid the Loans of such Bank (and terminated its Commitment, if applicable) rather than such Restricted Bank having assigned its interest hereunder.

 

(c)           In each case of clause (a) and (b) above, the Agent shall distribute an amended schedule of Commitments, which shall be deemed incorporated into this Agreement, to reflect changes in the identities of the Banks and adjustments of their respective Commitments and/or shares thereof resulting from any such replacement.

 

(d)           This section shall supersede any provision in Section 9.05 to the contrary.

 

Section 9.09           Governing Law; Submission to Jurisdiction.  This Agreement and each Note shall be governed by and construed in accordance with the laws of the State of New York.  The Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby.  The Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.

 

Section 9.10           Counterparts; Integration.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

 

Section 9.11           Confidentiality.  Each Bank agrees to exercise all reasonable efforts to keep any Information delivered or made available by the Borrower to it which is clearly indicated to be confidential information, confidential from anyone other than Persons employed or retained by such Bank who are or are expected to become engaged in evaluating, approving, structuring or administering the Loans; provided that nothing herein shall prevent any Bank from

 

52

 

disclosing such Information (a) to any of its affiliates or any other Bank or affiliate thereof, (b) to its officers, directors, employees, agents, attorneys and accountants who have a need to know such Information in accordance with customary banking practices and who receive such Information having been made aware of the restrictions set forth in this Section, (c) upon the order of any court or administrative agency, (d) upon the request or demand of any regulatory agency or authority having jurisdiction over such Bank or its affiliates, (e) as required by any applicable law, rule or regulation, (f) to any other Person if reasonably necessary to the administration of the credit facility provided herein, (g) which has been publicly disclosed, (h) to the extent reasonably required in connection with any litigation to which the Agent, any Bank, the Borrower or their respective affiliates may be a party, (i) to the extent reasonably required in connection with the exercise of any remedy hereunder, (j) to such Bank’s legal counsel and independent auditors, (k) with the prior written consent of the Borrower, and (l) to any actual or proposed Participant or Assignee of all or part of its rights hereunder which has agreed in writing to be bound by the provisions of this Section.  For purposes of this Section, “Information” means all information received from the Borrower relating to the Borrower or any of its business, other than any such information that is available to the Agent or any Bank on a nonconfidential basis prior to disclosure by the Borrower, provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential.

 

Section 9.12           No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Agent and the Arrangers are arm’s-length commercial transactions between the Borrower and its affiliates, on the one hand, and the Agent and the Arrangers, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Agent and the Arrangers is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its affiliates, or any other Person and (B) neither the Agent nor any Arranger has any obligation to the Borrower or any of its affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Agent, the Arrangers and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its affiliates, and neither the Agent nor any Arranger has any obligation to disclose any of such interests to the Borrower or any of its affiliates.

 

Section 9.13           USA PATRIOT Act Notice.  Each Bank that is subject to the Act (as hereinafter defined) and the Agent (for itself and not on behalf of any Bank) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Bank or the Agent, as applicable, to identify the Borrower in accordance with the Act. The Borrower shall, promptly following a request by

 

53

 

the Agent or any Bank, provide all documentation and other information that the Agent or such Bank requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

 

[remainder of page intentionally left blank]

 

54

 

IN WITNESS WHEREOF, the parties hereto have caused this Five-Year Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

 

	
 
    	
 
    	
BORROWER:
    
	
 
    	
 
    	
 
    
	
WITNESSES:
    	
 
    	
TARGET   CORPORATION
    
	
 
    	
 
    	
 
    
	
/s/   Lori Vogl
    	
 
    	
By:   
    	
/s/   Sara Ross
    
	
 
    	
 
    	
Name:
    	
Sara   J. Ross
    
	
/s/   Marie Feely
    	
 
    	
Title:
    	
Assistant   Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
1000   Nicollet Mall
    
	
 
    	
 
    	
Minneapolis,   Minnesota 55403
    
	
 
    	
 
    	
Attention:   Assistant Treasurer
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
 
    	
 
    	
ADMINISTRATIVE   AGENT:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
BANK   OF AMERICA, N.A., as
    
	
 
    	
 
    	
Administrative   Agent
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Judy D. Payne
    
	
 
    	
 
    	
Name:
    	
Judy   D. Payne
    
	
 
    	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Agency   Management Group
    
	
 
    	
 
    	
335   Madison Avenue, 4th Floor
    
	
 
    	
 
    	
Mail   Code: NY1-503-04-03
    
	
 
    	
 
    	
New   York, New York 10017
    
	
 
    	
 
    	
Attention:   Vice President
    
	
 
    	
 
    	
Telecopy   Number: (212) 901-7842
    
	
 
    	
 
    	
 
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
 
    	
 
    	
SYNDICATION   AGENT:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
CITIBANK,   N.A, as Syndication Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Shannon A. Sweeney
    
	
 
    	
 
    	
Name:
    	
Shannon   A. Sweeney
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
 
    	
 
    	
CO-DOCUMENTATION   AGENTS:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
JPMORGAN   CHASE BANK, N.A., as Co-Documentation Agent
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Sarah L. Freedman
    
	
 
    	
 
    	
Name:
    	
Sarah   L. Freedman
    
	
 
    	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
WELLS   FARGO BANK, NATIONAL ASSOCIATION, as Co-Documentation   Agent
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Peter Kiedrowski
    
	
 
    	
 
    	
Name:
    	
Peter   Kiedrowski
    
	
 
    	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
U.S.   BANK NATIONAL ASSOCIATION, as Co-Documentation   Agent
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Ludmila Yakovlev
    
	
 
    	
 
    	
Name:
    	
Ludmila   Yakovlev
    
	
 
    	
 
    	
Title:
    	
Assistant   Vice President
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
 
    	
 
    	
BANKS:
    
	
 
    	
 
    	
 
    
	
$204,000,000.00
    	
 
    	
BANK   OF AMERICA, N.A.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   J. Casey Cosgrove
    
	
 
    	
 
    	
Name:
    	
J.   Casey Cosgrove
    
	
 
    	
 
    	
Title:
    	
Director
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$204,000,000.00
    	
 
    	
CITIBANK,   N.A.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Shannon A. Sweeney
    
	
 
    	
 
    	
Name:
    	
Shannon   A. Sweeney
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$204,000,000.00
    	
 
    	
JPMORGAN   CHASE BANK, N.A.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Sarah L. Freedman
    
	
 
    	
 
    	
Name:
    	
Sarah   L. Freedman
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$204,000,000.00
    	
 
    	
WELLS   FARGO BANK, NATIONAL ASSOCIATION
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Peter Kiedrowski
    
	
 
    	
 
    	
Name:
    	
Peter   Kiedrowski
    
	
 
    	
 
    	
Title:
    	
Director
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$204,000,000.00
    	
 
    	
U.S.   BANK NATIONAL ASSOCIATION
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Ludmila Yakovlev
    
	
 
    	
 
    	
Name:
    	
Ludmila   Yakovlev
    
	
 
    	
 
    	
Title:
    	
Assistant   Vice President
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$125,000,000.00
    	
 
    	
THE   BANK OF TOKYO-MITSUBISHI, LTD.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Victor Pierzchalski
    
	
 
    	
 
    	
Name:
    	
Victor   Pierzchalski
    
	
 
    	
 
    	
Title:
    	
Authorized   Signatory
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$125,000,000.00
    	
 
    	
BARCLAYS   BANK PLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Nicole Conjares
    
	
 
    	
 
    	
Name:
    	
Nicole   Conjares
    
	
 
    	
 
    	
Title:
    	
Assistant   Vice President
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$125,000,000.00
    	
 
    	
MIZUHO   CORPORATE BANK, LTD.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Robert Gallagher
    
	
 
    	
 
    	
Name:
    	
Robert   Gallagher
    
	
 
    	
 
    	
Title:
    	
Authorized   Signatory
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$125,000,000.00
    	
 
    	
GOLDMAN   SACHS BANK USA
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Mark Walton
    
	
 
    	
 
    	
Name:
    	
Mark   Walton
    
	
 
    	
 
    	
Title:
    	
Authorized   Signatory
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$125,000,000.00
    	
 
    	
HSBC   BANK USA, NATIONAL ASSOCIATION
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Alan Vitulich
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
Alan   Vitulich
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$125,000,000.00
    	
 
    	
ROYAL   BANK OF CANADA
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Gordon MacArthur
    
	
 
    	
 
    	
Name:
    	
Gordon   MacArthur
    
	
 
    	
 
    	
Title:
    	
Authorized   Signatory
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$100,000,000.00
    	
 
    	
FIFTH   THIRD BANK
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Gary Losey
    
	
 
    	
 
    	
Name:
    	
Gary   S. Losey
    
	
 
    	
 
    	
Title:
    	
VP   Corporate Banking
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$100,000,000.00
    	
 
    	
TORONTO   DOMINION (NEW YORK) LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Debbi L. Brito
    
	
 
    	
 
    	
Name:
    	
Debbi   L. Brito
    
	
 
    	
 
    	
Title:
    	
Authorized   Signatory
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$100,000,000.00
    	
 
    	
DEUTSCHE   BANK AG NEW YORK BRANCH
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Heidi Sandquist
    
	
 
    	
 
    	
Name:
    	
Heidi   Sandquist
    
	
 
    	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Ming K. Chu
    
	
 
    	
 
    	
Name:
    	
Ming   K. Chu
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$75,000,000.00
    	
 
    	
STATE   STREET BANK & TRUST COMPANY
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Andrei Bourdine
    
	
 
    	
 
    	
Name:
    	
Andrei   Bourdine
    
	
 
    	
 
    	
Title:
    	
Authorized   Signatory
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$50,000,000.00
    	
 
    	
SUMITOMO   MITSUI BANKING CORPORATION
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Shuji Yabe
    
	
 
    	
 
    	
Name:
    	
Shuji   Yabe
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$30,000,000.00
    	
 
    	
THE   BANK OF NEW YORK MELLON
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   David B. Wirl
    
	
 
    	
 
    	
Name:
    	
David   B. Wirl
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

	
$25,000,000.00
    	
FIRST   HAWAIIAN BANK
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Dawn Hofmann
    
	
 
    	
Name:
    	
Dawn   Hofmann
    
	
 
    	
Title:
    	
Vice   President
    

 

CREDIT AGREEMENT

(Target Corporation)

Signature Page

 

 

EXHIBIT A

 

NOTE

 

[                    ,                     ]

, 2011

 

For value received, Target Corporation, a Minnesota corporation (the “Borrower”), promises to pay to the order of                                  (the “Bank”), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below on the last day of the Interest Period relating to such Loan.  The Borrower promises to pay interest on the unpaid principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit Agreement.  All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of Bank of America, N.A., Mail Code: CA4-702-02-25 Building B, 2001 Clayton Road, Concord, California  94520-2405.

 

All Loans made by the Bank, the respective types and maturities thereof and all repayments of the principal thereof shall be recorded by the Bank and, if the Bank so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding may be endorsed by the Bank on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the failure of the Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement.

 

This note is one of the Notes referred to in the Five-Year Credit Agreement dated as of October 14, 2011 among the Borrower, the Banks party thereto, the Co-Documentation Agents and Syndication Agent listed therein and Bank of America, N.A., as Agent (as the same may be amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Terms defined in the Credit Agreement are used herein with the same meanings.  Reference is made to the Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity hereof.

 

[Signature page follows.]

 

A-1

 

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed by its authorized officer as of the day and year first above written.

 

	
 
    	
TARGET   CORPORATION
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Sara   J. Ross
    
	
 
    	
Title:
    	
Assistant   Treasurer
    

 

A-2

 

Note (Cont’d)

 

LOANS AND PAYMENTS OF PRINCIPAL

 

	
Date
    	
 
    	
Principal
   Amount of
   Loan
    	
 
    	
Type of
   Loan
    	
 
    	
Amount of
   Principal
   Repaid
    	
 
    	
Maturity
   Date
    	
 
    	
Notation
   Made By
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-3

 

EXHIBIT B

 

FORM OF MONEY MARKET QUOTE REQUEST

 

[Date]

 

To:                            Bank of America, N.A. (the “Agent”)

 

From:                Target Corporation

 

Re:                             Five-Year Credit Agreement (the “Credit Agreement”) dated as of October 14, 2011 among the Borrower, the Banks party thereto, the Co-Documentation Agents and Syndication Agent listed therein and the Agent

 

We hereby give notice pursuant to Section 2.03 of the Credit Agreement that we request Money Market Quotes for the following proposed Money Market Borrowing(s):

 

Date of Borrowing:

 

	
Principal Amount*
    	
 
    	
Interest Period**
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
$
    	
 
    	
 
    	
 
    

 

Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate].  [The applicable base rate is the London Interbank Offered Rate.]

 

Terms used herein have the meanings assigned to them in the Credit Agreement.

 

	
 
    	
TARGET   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

* Amount must be $25,000,000 or a larger multiple of $5,000,000.

 

** Not less than one month (LIBOR Auction) or not less than 14 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period.

 

B-1

 

EXHIBIT C

 

FORM OF INVITATION FOR MONEY MARKET QUOTES

 

[Date]

 

To:                            [Name of Bank]

 

Re:                             Invitation for Money Market Quotes

to Target Corporation (the “Borrower”)

 

Pursuant to Section 2.03 of the Five-Year Credit Agreement dated as of October 14, 2011 among the Borrower, the Banks party thereto, the Co-Documentation Agents and Syndication Agent listed therein and the undersigned, as Agent, we are pleased on behalf of the Borrower to invite you to submit Money Market Quotes to the Borrower for the following proposed Money Market Borrowing(s):

 

 

Date of Borrowing:

 

	
Principal   Amount
    	
 
    	
Interest Period
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
$
    	
 
    	
 
    	
 
    

 

Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate].  [The applicable base rate is the London Interbank Offered Rate.]

 

Please respond to this invitation by no later than [2:00 P.M.] [10:15 A.M.] (New York City time) on [date].

 

 

	
 
    	
BANK   OF AMERICA, N.A., as Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Authorized   Officer
    

 

C-1

 

EXHIBIT D

 

FORM OF MONEY MARKET QUOTE

 

BANK OF AMERICA, N.A.

Agency Services

Mail Code: CA4-702-02-25

Building B

2001 Clayton Road

Concord, California  94520-2405

 

Attention:

 

Re:                               Money Market Quote to

Target Corporation (the “Borrower”)

 

In response to your invitation on behalf of the Borrower dated                 ,         , we hereby make the following Money Market Quote on the following terms:

 

1.                                       Quoting Bank:

 

2.                                       Person to contact at Quoting Bank:

 

3.                                       Date of Borrowing:                                                  *

 

4.                                       We hereby offer to make Money Market Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates:

 

* As specified in the related Invitation.

 

D-1

 

	
Principal
    	
 
    	
Interest
    	
 
    	
Money Market
    	
 
    	
[Absolute
    	
 
    
	
Amount**
    	
 
    	
Period***
    	
 
    	
[Margin]****
    	
 
    	
Rate]*****
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
$
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
$
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

[Provided, that the aggregate principal amount of Money Market Loans for which the above offers may be accepted shall not exceed $                    .]**

 

We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the Five-Year Credit Agreement dated as of October 14, 2011 among the Borrower, the Banks party thereto, the Co-Documentation Agents and Syndication Agent listed therein and yourselves, as Agent, irrevocably obligates us to make the Money Market Loan(s) for which any offer(s) are accepted, in whole or in part.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
[NAME   OF BANK]
    
	
 
    	
 
    
	
Dated:
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized   Officer
    

 

** Principal amount bid for each Interest Period may not exceed principal amount requested. Specify aggregate limitation if the sum of the individual offers exceeds the amount the Bank is willing to lend. Bids must be made for $5,000,000 or a larger multiple of $1,000,000.

 

*** Not less than one month or not less than 14 days, as specified in the related invitation. No more than five bids are permitted for each Interest Period.

 

**** Margin over or under the London Interbank Offered Rate determined for the applicable Interest Period.  Specify percentage (to the nearest 1/10,000 of 1%) and specify whether “PLUS” or “MINUS”.

 

***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).

 

D-2

 

EXHIBIT E

 

FORM OF COMMITMENT INCREASE AGREEMENT

 

Date:

 

Bank of America, N.A.,

as Agent

Mail Code: CA4-702-02-25

Building B

2001 Clayton Road

Concord, California  94520-2405

 

Target Corporation

1000 Nicollet Mall

Minneapolis, Minnesota 55403

 

Ladies and Gentlemen:

 

We refer to the Five-Year Credit Agreement dated as of October 14, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Target Corporation, a Minnesota corporation (the “Borrower”), the Banks referred to therein, the Co-Documentation Agents and Syndication Agent referred to therein and Bank of America, N.A., as administrative agent (in such capacity, the “Agent”).  Terms defined in the Credit Agreement are used herein as therein defined.

 

This Commitment Increase Agreement is made and delivered pursuant to Section 2.17 of the Credit Agreement.

 

Subject to the terms and conditions of Section 2.17 of the Credit Agreement,                                                                (“Increasing Bank”) will increase its Commitment to an amount equal to $                      , on the Increased Commitment Date applicable to it.  The Increasing Bank hereby confirms and agrees that with effect on and after such Increased Commitment Date, the Commitment of the Increasing Bank shall be increased to the amount set forth above, and the Increasing Bank shall have all of the rights and be obligated to perform all of the obligations of a Bank under the Credit Agreement with a Commitment in the amount set forth above.

 

Effective on the Increased Commitment Date applicable to it, the Increasing Bank (i) accepts and assumes from the assigning Banks, without recourse, such assignment of Committed Loans as shall be necessary to effectuate the adjustments in the pro rata shares of Banks contemplated by Section 2.17 of the Credit Agreement, and (ii) agrees to fund on such Increased Commitment Date such assumed amounts of Committed Loans to Agent for the account of the assigning Banks in accordance with the provisions of the Credit Agreement, in the amount notified to Increasing Bank by Agent.

 

E-1

 

THIS COMMITMENT INCREASE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, NOTWITHSTANDING ITS EXECUTION OUTSIDE SUCH STATE.

 

IN WITNESS WHEREOF, Increasing Bank has caused this Commitment Increase Agreement to be duly executed and delivered in                           ,                             , by its proper and duly authorized officer as of the day and year first above written.

 

	
 
    	
[INCREASING   BANK]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

CONSENTED TO as of                                           :

 

TARGET CORPORATION

 

 

	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

 

BANK OF AMERICA, N.A.,

as Agent

 

 

	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

E-2

 

EXHIBIT F

 

FORM OF ADDED BANK AGREEMENT

 

Date:

 

Bank of America, N.A.,

as Agent

Mail Code: CA4-702-02-25

Building B

2001 Clayton Road

Concord, California  94520-2405

 

Target Corporation

1000 Nicollet Mall

Minneapolis, Minnesota 55403

 

Ladies and Gentlemen:

 

We refer to the Five-Year Credit Agreement dated as of October 14, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Target Corporation, a Minnesota corporation (the “Borrower”), the Banks referred to therein, the Co-Documentation Agents and Syndication Agent referred to therein and Bank of America, N.A., as administrative agent (in such capacity, the “Agent”).  Terms defined in the Credit Agreement are used herein as therein defined.

 

This Added Bank Agreement is made and delivered pursuant to Section 2.17 of the Credit Agreement.

 

Subject to the terms and conditions of Section 2.17 of the Credit Agreement,                                                    (the “Added Bank”) will become a party to the Credit Agreement as a Bank, with a Commitment equal to $                      , on the Increased Commitment Date applicable to it.  The Added Bank hereby confirms and agrees that with effect on and after such Increased Commitment Date, the Added Bank shall be and become a party to the Credit Agreement as a Bank and have all of the rights and be obligated to perform all of the obligations of a Bank thereunder with a Commitment in the amount set forth above.

 

Effective on the Increased Commitment Date applicable to it, the Added Bank (i) accepts and assumes from the assigning Banks, without recourse, such assignment of Committed Loans as shall be necessary to effectuate the adjustments in the pro rata shares of the Banks contemplated by Section 2.17 of the Credit Agreement, and (ii) agrees to fund on such Increased Commitment Date such assumed amounts of Committed Loans to Agent for the account of the assigning Banks in accordance with the provisions of the Credit Agreement, in the amount notified to the Added Bank by the Agent.

 

F-1

 

The following administrative details apply to the Added Bank:

 

	
(A)
    	
Lending Office(s):
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Bank   name:
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Attention:
    	
 
    
	
 
    	
Telephone:
    	
(    )
    
	
 
    	
Facsimile:
    	
(    )
    
	
 
    	
 
    	
 
    
	
 
    	
Bank   name:
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Attention:
    	
 
    
	
 
    	
Telephone:
    	
(    )
    
	
 
    	
Facsimile:
    	
(    )
    
	
 
    	
 
    	
 
    
	
(B)
    	
Notice Address:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Bank   name:
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Attention:
    	
 
    
	
 
    	
Telephone:
    	
(    )
    
	
 
    	
Facsimile:
    	
(    )
    
	
 
    	
 
    	
 
    
	
(C)
    	
Payment Instructions:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Account   No.:
    	
 
    
	
 
    	
At:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Reference:
    	
 
    
	
 
    	
Attention:
    	
 
    

 

THIS ADDED BANK AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, NOTWITHSTANDING ITS EXECUTION OUTSIDE SUCH STATE.

 

F-2

 

IN WITNESS WHEREOF, the Added Bank has caused this Added Bank Agreement to be duly executed and delivered in                           ,                             , by its proper and duly authorized officer as of the day and year first above written.

 

	
 
    	
[ADDED   BANK]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

CONSENTED TO as of                                                  :

 

TARGET CORPORATION

 

 

	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

 

BANK OF AMERICA, N.A.,

as Agent

 

 

	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

F-3

 

EXHIBIT G

 

OPINION OF

COUNSEL FOR THE BORROWER

 

October 14, 2011

 

To the Banks and the Agent

Referred to Below

c/o Bank of America, N.A., as Agent

100 N. Tryon Street

Charlotte, North Carolina 28255-0001

 

Dear Ladies and Gentlemen:

 

I am Executive Vice President and General Counsel of Target Corporation (the “Borrower”), and I have acted as counsel to the Borrower in connection with the Five-Year Credit Agreement (the “Credit Agreement”) dated as of October 14, 2011 among the Borrower, the banks listed on the signature pages thereof (the “Banks”), the Co-Documentation Agents (the “Co-Documentation Agents”) and Syndication Agent (the “Syndication Agent”) listed therein and Bank of America, N.A., as Agent (in such capacity, the “Agent”).  As such counsel, I, or the attorneys over whom I exercise supervision, have examined (i) the Amended and Restated Articles of Incorporation of the Borrower, as amended to date; (ii) the By-laws of the Borrower, as amended to date; and (iii) the corporate proceedings of the Borrower relating to the Credit Agreement.  I, or the attorneys over whom I exercise supervision, have also examined certificates of public officials and have made such other examinations as we have deemed necessary to enable me to give the opinions herein expressed.

 

In our examination, I, and the attorneys over whom I exercise supervision, have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to, and authenticity of the originals of, all documents submitted to us as certified, photostatic or conformed documents.  In such examination we have relied on certificates of public officials as to the incorporation, good standing and valid existence of the Borrower, and, as to matters of fact, upon inquiry of officers of the Borrower and the representations and warranties of the Borrower contained in the Credit Agreement.

 

All terms used and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

 

Upon the basis of the foregoing, I am of the opinion that:

 

1.                                       Each of the Borrower and its Consolidated Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where, in light of the nature of the business transacted or the property owned by it, such qualification is necessary and the failure so to qualify might

 

G-1

 

permanently impair title to property material to its operations or its right to enforce a material contract against others, or expose it to substantial liability in such jurisdiction.

 

2.                                       The Credit Agreement and the Notes have been duly executed and delivered by Borrower to the Agent.  The execution, delivery and performance by the Borrower of the Credit Agreement and the Notes are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the articles of incorporation or by-laws of the Borrower or of any agreement or instrument evidencing or governing Debt of the Borrower or any other material agreement, judgment, injunction, order, decree or other instrument binding upon the Borrower or result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.

 

3.                                       There is no action, suit or proceeding pending against, or to the best of my knowledge threatened against or affecting, the Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official which might reasonably be expected to materially adversely affect the business, consolidated financial position or consolidated results of operations of the Borrower and its Consolidated Subsidiaries or which in any manner draws into question the validity of the Credit Agreement or the Notes.

 

This opinion letter is delivered solely to the Banks, the Co-Documentation Agents, the Syndication Agent and the Agent, and may not be relied upon by any other Person other than the addressees hereof, any successor or assignee of any addressee (including successive assignees), McGuireWoods LLP (who may rely upon this opinion as to matters of Minnesota law as if this opinion were addressed to such firm) and any Person who shall acquire a participation interest of any Bank (collectively, the “Reliance Parties”).  This opinion letter may be relied upon only in connection with matters related to the Credit Agreement and then only as if it were delivered to the Reliance Party on the date hereof.  My opinions herein shall not be quoted or otherwise included, summarized or referred to in any publication or document, in whole or in part, for any purposes whatsoever, or furnished to any Person other than a Reliance Party (or a Person considering whether to become a Reliance Party), except as may be required of any Reliance Party by applicable law or regulation or in accordance with any auditing or oversight function or request of regulatory agencies to which a Reliance Party is subject.

 

	
 
    	
Very   truly yours,
    

 

G-2

 

EXHIBIT H

 

OPINION OF

MCGUIREWOODS LLP, SPECIAL COUNSEL

FOR THE AGENT

 

October 14, 2011

 

Each of the Lender Parties

referenced below

 

Target Corporation

 

Ladies and Gentlemen:

 

We have acted as special New York counsel to Bank of America, N.A., as administrative agent (in such capacity, the “Administrative Agent”), in connection with the transactions (collectively, the “Transactions”) to be consummated on the date hereof pursuant to the Five-Year Credit Agreement dated as of October 14, 2011 (the “Credit Agreement”), among Target Corporation, a Minnesota corporation (the “Borrower”), the various financial institutions signatory thereto as “Banks” as of the date hereof (collectively, the “Banks”), the various financial institutions signatory thereto as “Co-Documentation Agents” as of the date hereof (in such capacity, collectively, the “Co-Documentation Agents”), and the financial institution signatory thereto as “Syndication Agent” as of the date hereof (in such capacity, the “Syndication Agent”; and together with the Banks, the Co-Documentation Agents and the Administrative Agent, collectively, the “Lender Parties” and each, individually, a “Lender Party”).  This opinion letter is furnished to you pursuant to Section 3.01(d) of the Credit Agreement.  Unless otherwise defined herein, terms used herein have the meanings provided for in the Credit Agreement.

 

Documents Reviewed

 

In connection with this opinion letter, we have examined the Credit Agreement and the Notes executed and delivered by the Borrower to certain of the Banks on the date hereof (collectively, the “Subject Documents” and each, individually, a “Subject Document”).  In addition, we have examined and relied upon originals, or copies identified to our satisfaction as being true copies, of such other records, documents and instruments as we have deemed necessary for the purposes of this opinion letter.

 

Assumptions Underlying Our Opinion

 

For all purposes of the opinion expressed herein, we have assumed, without independent investigation, the following.

 

H-1

 

(a)                                  Factual Matters.  To the extent that we have reviewed and relied upon (i) certificates of the Borrower or authorized representatives thereof, (ii) representations of the Borrower set forth in the Subject Documents and (iii) certificates and assurances from public officials, all of such certificates, representations and assurances are accurate with regard to factual matters and all official records (including filings with public authorities) are properly indexed and filed and are accurate and complete.

 

(b)                                 Signatures.  The signatures of individuals signing the Subject Documents are genuine and authorized.

 

(c)                                  Authentic and Conforming Documents.  All documents submitted to us as originals are authentic, complete and accurate, and all documents submitted to us as copies conform to authentic original documents.

 

(d)                                 Organizational Status, Power and Authority and Legal Capacity of Parties.  All parties to the Subject Documents are validly existing and in good standing in their respective jurisdictions of formation and have the capacity and full power and authority to execute, deliver and perform the Subject Documents and the documents required or permitted to be delivered and performed thereunder.  All individuals signing the Subject Documents have the legal capacity to execute such Subject Documents.

 

(e)                                  Authorization, Execution and Delivery of Subject Documents by Parties.  All of the Subject Documents and the documents required or permitted to be delivered thereunder have been duly authorized by all necessary corporate, limited liability company, partnership or other action on the part of the parties thereto and have been duly executed and delivered by such parties.

 

(f)                                    Subject Documents Binding on Certain Parties.  All of the Subject Documents and the documents required or permitted to be delivered thereunder are valid and binding obligations enforceable against the parties thereto in accordance with their terms, except that no such assumption is made as to the Borrower.

 

(g)                                 Noncontravention.  Neither the execution and delivery of the Subject Documents by any party thereto nor the performance by such party of its obligations thereunder will conflict with or result in a breach of (i) the certificate or articles of incorporation, bylaws, certificate or articles of organization, operating agreement, certificate of limited partnership, partnership agreement, trust agreement or other similar organizational documents of any such party, (ii) any law or regulation of any jurisdiction applicable to any such party, or (iii) any order, writ, injunction or decree of any court or governmental instrumentality or agency applicable to any such party or any agreement or instrument to which any such party may be a party or by which its properties are subject or bound.

 

(h)                                 Governmental Approvals.  All consents, approvals and authorizations of, or filings with, all governmental authorities that are required as a condition to the execution and delivery of the Subject Documents by the parties thereto and to the consummation by such parties of the Transactions have been obtained or made.

 

H-2

 

(i)                                     No Mutual Mistake, Amendments, etc.  There has not been any mutual mistake of fact, fraud, duress or undue influence in connection with the Transactions.  There are no oral or written statements or agreements that modify, amend or vary, or purport to modify, amend or vary, any of the terms of the Subject Documents.

 

Our Opinion

 

Based on and subject to the foregoing and the exclusions, qualifications, limitations and other assumptions set forth in this opinion letter, we are of the opinion that each Subject Document constitutes the valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms.

 

Matters Excluded from Our Opinion

 

We express no opinion with respect to the following matters:

 

(a)                                  Indemnification and Change of Control.  The enforceability of any agreement of the Borrower in a Subject Document relating to (i) indemnification, contribution or exculpation from costs, expenses or other liabilities or (ii) changes in the organizational control or ownership of the Borrower, which agreement (in the case of clause (i) or clause (ii)) is contrary to public policy or applicable law.

 

(b)                                 Jurisdiction, Venue, etc.  The enforceability of any agreement of the Borrower in a Subject Document to submit to the jurisdiction of any specific federal or state court (other than the enforceability in a court of the State of New York of any such agreement to submit to the jurisdiction of a court of the State of New York), to waive any objection to the laying of the venue, to waive the defense of forum non conveniens in any action or proceeding referred to therein, to waive trial by jury, to effect service of process in any particular manner or to establish evidentiary standards, and any agreement of the Borrower regarding the choice of law governing a Subject Document (other than the enforceability in a court of the State of New York of any such agreement that the laws of the State of New York shall govern a Subject Document).

 

(c)                                  Certain Laws.  The following federal and state laws, and regulations promulgated thereunder, and the effect of such laws and regulations on the opinion expressed herein: securities (including the Investment Company Act of 1940, as amended, and Blue Sky laws), antifraud, derivatives or commodities law; banking laws; the USA PATRIOT Act of 2001 and other anti-terrorism laws; laws governing embargoed persons; anti-money laundering laws; truth-in-lending laws; equal credit opportunity laws; consumer protection laws; pension and employee benefit laws; environmental laws; tax laws; health and occupational safety laws; building codes and zoning, subdivision and other laws governing the development, use and occupancy of real property; the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other antitrust and unfair competition laws; the Assignment of Claims Act of 1940, as amended; and laws governing specially regulated industries (such as communications, energy, gaming, healthcare, insurance and utilities) or specially regulated products or substances (such as alcohol, drugs, food and radioactive materials).

 

H-3

 

(d)                                 Local Ordinances.  The ordinances, statutes, administrative decisions, orders, rules and regulations of any municipality, county, special district or other political subdivision of a state.

 

(e)                                  Trust Relationship.  The creation of any trust relationship by the Borrower on behalf of any Lender Party.

 

(f)                                    Certain Agreements of Borrower Parties.  The enforceability of any agreement of the Borrower in a Subject Document providing:

 

(i)                                     for specific performance of the Borrower’s obligations;

 

(ii)                                  for the right of any purchaser of a participation interest from any Lender to set off or apply any deposit, property or indebtedness with respect to any such participation interest;

 

(iii)                               for establishment of a contractual rate of interest payable after judgment;

 

(iv)                              for adjustments of payments among Lenders or rights of set off;

 

(v)                                 for the granting of any power of attorney;

 

(vi)                              for survival of liabilities and obligations of any party under any of the Subject Documents arising after the effective date of termination of the Credit Agreement;

 

(vii)                           for obligations to make an agreement in the future;

 

(viii)                        that any act done in contravention thereof is void or voidable;

 

(ix)                                for the survival of any claim beyond any applicable statute of limitation;

 

(x)                                   for the confession of or consent to any judgment; or

 

(xi)                                for the severability of provisions in any Subject Document.

 

(g)                                 Remedies.  The enforceability of any provision in any Subject Document to the effect that rights or remedies are not exclusive, that every right or remedy is cumulative and may be exercised in addition to any other right or remedy, that the election of some particular remedy does not preclude recourse to one or more others or that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of any such right or remedy.

 

H-4

 

Qualifications and Limitations Applicable to Our Opinion

 

The opinion set forth above is subject to the following qualifications and limitations:

 

(a)                                  Applicable Law.  Our opinion is limited to the laws of the State of New York and applicable federal laws of the United States of America, and we do not express any opinion concerning any other law.

 

(b)                                 Bankruptcy.  Our opinion is subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, laws relating to preferences, fraudulent transfers and equitable subordination), reorganization, moratorium and other similar laws affecting creditors’ rights generally.

 

(c)                                  Equitable Principles.  Our opinion is subject to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing.  In applying such principles, a court, among other things, might limit the availability of specific equitable remedies (such as injunctive relief and the remedy of specific performance), might not allow a creditor to accelerate maturity of debt or exercise other remedies upon the occurrence of a default deemed immaterial or for non-credit reasons or might decline to order a debtor to perform covenants in a Subject Document.

 

(d)                                 Unenforceability of Certain Provisions.  Certain of the provisions contained in the Subject Documents may be unenforceable or ineffective, in whole or in part.  Such provisions include, without limitation, those which: require waivers or amendments to be made only in writing; authorize self-help or authorize any of the Lender Parties to act on behalf of, or exercise the rights of, the Borrower; violate applicable public policy; waive or do not require notice in connection with the exercise of remedies; authorize a standard for decision other than commercial reasonableness; purport to validate otherwise invalid provisions of other documents incorporated or referred to in any Subject Document; or subrogate any of the Lender Parties or any other party to the rights of others.  The inclusion of such provisions, however, does not render any Subject Document invalid as a whole, and each of the Subject Documents contains, in our opinion, adequate remedial provisions for the ultimate practical realization of the principal benefits purported to be afforded by such Subject Document, subject to the other qualifications contained in this opinion letter.  We note, however, that the unenforceability of such provisions may result in delays in enforcement of the rights and remedies of the Lender Parties under the Subject Documents, and we express no opinion as to the economic consequences, if any, of such delays.

 

(e)                                  Choice of New York Law and Forum.  To the extent that any opinion relates to the enforceability of the choice of New York law and choice of New York forum provisions of any Subject Document, our opinion is rendered in reliance upon N.Y. Gen. Oblig. Law §§ 5-1401 and 5-1402 (McKinney 2011) and N.Y. CPLR 327(b) (McKinney 2011) and is subject to the qualification that such enforceability may be limited by principles of public policy, comity and constitutionality.  We express no opinion as to whether a United States federal court

 

H-5

 

would have subject-matter or personal jurisdiction over a controversy arising under the Subject Documents.

 

(f)                                    Material Changes to Terms.  Provisions in the Subject Documents which provide that any obligations of the Borrower thereunder will not be affected by the action or failure to act on the part of any Lender Party or by an amendment or waiver of the provisions contained in the other Subject Documents might not be enforceable under circumstances in which such action, failure to act, amendment or waiver so materially changes the essential terms of the obligations that, in effect, a new contract has arisen between the Lender Parties and the Borrower.

 

(g)                                 Incorporated Documents.  The foregoing opinion does not relate to (and we have not reviewed) any documents or instruments other than the Subject Documents, and we express no opinion as to (i) such other documents or instruments (including, without limitation, any documents or instruments referenced or incorporated in any of the Subject Documents), (ii) the interplay between the Subject Documents and any such other documents and instruments, or (iii) any schedule, exhibit, appendix or like supplemental document referred to as attached to any Subject Document if so attached or in any manner altered after our review of such document.

 

(h)                                 Mathematical Calculations.  We have made no independent verification of any of the numbers, schedules, formulae or calculations in the Subject Documents, and we render no opinion with regard to the accuracy, validity or enforceability of any of them.

 

Miscellaneous

 

The foregoing opinion is being furnished only to the Lender Parties and only for the purpose referred to in the first paragraph of this opinion letter, and this opinion letter is not to be furnished to any other person or entity or used or relied upon by any other person or for any other purpose without our prior written consent.  At your request, we hereby consent to (a) reliance hereon by any future assignee of any Bank’s interest in the loans under the Credit Agreement pursuant to an assignment that is made and consented to in accordance with the express provisions of Section 9.06(c) of the Credit Agreement, on the condition and understanding that (i) this letter speaks only as of the date hereof, (ii) we have no responsibility or obligation to update this letter, to consider its applicability or correctness to any person other than its addressee(s), or to take into account changes in law, facts or any other developments of which we may later become aware, and (iii) any such reliance by a future assignee must be actual and reasonable under the circumstances existing at the time of assignment, including any changes in law, facts or any other developments known to or reasonably knowable by the assignee at such time; and (b) the furnishing of this opinion letter to (but not reliance upon this opinion letter by) any regulatory agency to which any Lender Party (or any successor or assignee permitted by the Credit Agreement) is subject, in accordance with any auditing or oversight function or other request of such regulatory agency, or as otherwise required by applicable law.

 

H-6

 

The opinion set forth herein is made as of the date hereof, and we assume no obligation to supplement this opinion letter if any applicable laws change after the date hereof or if we become aware after the date hereof of any facts that might change the opinion expressed herein.  Headings in this opinion letter are intended for convenience of reference only and shall not affect its interpretation.

 

	
 
    	
Very   truly yours,
    

 

H-7

 

EXHIBIT I

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

AGREEMENT dated as of                   ,          among [ASSIGNOR] (the “Assignor”), [and] [ASSIGNEE] (the “Assignee”), [and TARGET CORPORATION  (the “Borrower”)].

 

WITNESSETH

 

WHEREAS, this Assignment and Assumption Agreement (the “Agreement”) relates to the Five-Year Credit Agreement dated as of October 14, 2011 among the Borrower, the Assignor and the other Banks party thereto, as Banks, the Co-Documentation Agents and Syndication Agent listed therein, and Bank of America, N.A., as Agent (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, as provided under the Credit Agreement, the Assignor has a Commitment to make Loans to the Borrower for an aggregate principal amount at any time outstanding not to exceed $                      ;

 

WHEREAS, Committed Loans made to the Borrower by the Assignor under the Credit Agreement in the aggregate principal amount of $                     are outstanding at the date hereof;

 

WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of the Assignor under the Credit Agreement in respect of a portion of its Commitment thereunder in an amount equal to $                     (the “Assigned Amount”), together with a corresponding portion of its outstanding Committed Loans, and the Assignee proposes to accept assignment of such rights and assume the corresponding obligations from the Assignor on such terms;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows:

 

SECTION 1.  Definitions.  All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Credit Agreement.

 

SECTION 2. Assignment.  The Assignor hereby assigns and sells to the Assignee without recourse, representation or warranty of any kind except as expressly stated below all of the rights of the Assignor under the Credit Agreement to the extent of the Assigned Amount, and the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of the Assignor under the Credit Agreement to the extent of the Assigned Amount, including the purchase from the Assignor of the corresponding portion of the principal amount of the Committed Loans made by the Assignor outstanding at the date hereof.  Upon the execution and delivery hereof by the Assignor[, and] the Assignee[ and the Borrower], [consent to and] acknowledgment hereof by the Agent and the payment of the amounts specified in Section 3 required to be paid on the date hereof (a) the Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of a Bank under the Credit Agreement with a Commitment in an amount equal to the Assigned Amount, and (b) the Commitment of the Assignor shall, as of the date hereof, be reduced by a like amount and the Assignor released from

 

I-1

 

its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee.  The assignment provided for herein shall be without recourse to the Assignor.

 

SECTION 3. Payments.  As consideration for the assignment and sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof in Federal funds the amount heretofore agreed between them.*  It is understood that facility fees accrued to the date hereof with respect to the Assigned Amount are for the account of the Assignor and such fees accruing from and including the date hereof are for the account of the Assignee.  Each of the Assignor and the Assignee hereby agrees that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party’s interest therein and shall promptly pay the same to such other party.

 

[SECTION 4. Consent of the Agent [and the Borrower].  This Agreement is conditioned upon the consent of the Agent [and the Borrower] pursuant to Section 9.06(c) of the Credit Agreement. The execution of this Agreement by the Agent [and the Borrower] is evidence of this consent. [Pursuant to Section 9.06(c) the Borrower agrees to execute and deliver a Note payable to the order of the Assignee to evidence the assignment and assumption provided for herein.]]

 

SECTION 5. Non-Reliance on Assignor.  The Assignor makes no representation or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition, or statements of the Borrower, or the validity and enforceability of the obligations of the Borrower in respect of the Credit Agreement or any Note.  The Assignee acknowledges that it has, independently and without reliance on the Assignor, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Borrower.

 

SECTION 6. Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

SECTION 7. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

*                                         Amount should combine principal together with accrued interest and breakage compensation, if any, to be paid by the Assignee, net of any portion of any upfront fee to be paid by the Assignor to the Assignee.  It may be preferable in an appropriate case to specify these amounts generically or by formula rather than as a fixed sum.

 

I-2

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.

 

 

	
 
    	
[ASSIGNOR]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
[ASSIGNEE]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
[TARGET   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Title:]
    

 

[Consented to and] Acknowledged by:

 

BANK OF AMERICA, N.A., as Agent

 

	
By
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

I-3

 

EXHIBIT J

 

FORM OF BORROWING NOTICE

 

To:                              Bank of America, N.A., as Agent

Mail Code: CA4-702-02-25

Building B

2001 Clayton Road

Concord, California  94520-2405

Attention: Agency Services

 

Reference is hereby made to the Five-Year Credit Agreement dated as of October 14, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Target Corporation, a Minnesota corporation (the “Borrower”), the Banks referred to therein, the Co-Documentation Agents and Syndication Agent referred to therein and Bank of America, N.A., as administrative agent (in such capacity, the “Agent”).  Terms defined in the Credit Agreement are used herein as therein defined.

 

The Borrower through its authorized representative hereby gives notice to the Agent that Loans of the type and amount set forth below be made on the date indicated:

 

	
Type of Loan
   (check one)
    	
 
    	
Interest Period(1)
    	
 
    	
Aggregate Amount(2)
    	
 
    	
Date of Loan(3)
    	
 
    
	
Base Rate Loan
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Euro-Dollar Loan
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CD Loan
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(1)                                  For any Euro-Dollar Loan, one, two, three or six months, and for any CD Loan, 30, 60, 90 or 180 days.

(2)                                  Must be $25,000,000 or if greater an integral multiple of $5,000,000.

(3)                                  At least three (3) Euro-Dollar Business Days later if a Euro-Dollar Loan, and at least two (2) Domestic Business Days later if a CD Loan.

 

The Borrower hereby requests that the proceeds of Loans described in this Borrowing Notice be made available to the Borrower as follows: [insert transmittal instructions].

 

The undersigned hereby certifies that all conditions contained in the Credit Agreement to the making of any Loan requested hereby, including those conditions required under Section 3.02, have been met or satisfied in full.

 

	
 
    	
TARGET   CORPORATION
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
Date:
    	
 
    

 

J-1Exhibit 10.1

 

	

    	
 
    	
CLIFFORD CHANCE LLP
    

 

DATED 18 NOVEMBER 2011

 

TALBOT HOLDINGS LTD.

AS BORROWER

 

VALIDUS HOLDINGS, LTD.

AS GUARANTOR

 

VALIDUS REINSURANCE, LTD.

AS SECURITY PROVIDER

 

LLOYDS TSB BANK PLC

AND

ING BANK N.V., LONDON BRANCH

AS MANDATED LEAD ARRANGERS AND BOOKRUNNERS

 

LLOYDS TSB BANK PLC

AS AGENT

 

AND

 

LLOYDS TSB BANK PLC

AS SECURITY TRUSTEE

 

 

AMENDMENT AND RESTATEMENT AGREEMENT 
 RELATING TO A $100,000,000 STANDBY LETTER 
 OF CREDIT FACILITY AGREEMENT 
 DATED 28 NOVEMBER 2007 AS AMENDED BY AN
 AMENDMENT AND RESTATEMENT AGREEMENT DATED
 19 NOVEMBER 2009 AND AN AMENDMENT AGREEMENT
 DATED 2 AUGUST 2011

 

 

 

CONTENTS

 

	
Clause
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Definitions And   Interpretation
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
Restatement
    	
2
    
	
 
    	
 
    	
 
    
	
3.
    	
Representations
    	
2
    
	
 
    	
 
    	
 
    
	
4.
    	
Continuity And Further Assurance
    	
2
    
	
 
    	
 
    	
 
    
	
5.
    	
Fees, Costs And Expenses
    	
3
    
	
 
    	
 
    	
 
    
	
6.
    	
Miscellaneous
    	
4
    
	
 
    	
 
    	
 
    
	
7.
    	
Governing Law
    	
4
    
	
 
    	
 
    	
 
    
	
Schedule 1
    	
CONDITIONS   PRECEDENT
    	
5
    
	
 
    	
 
    	
 
    
	
Schedule 2
    	
RESTATED   AGREEMENT
    	
8
    
	
 
    	
 
    	
 
    
	
Signatures
    	
 
    	
9
    
					

 

 

THIS AGREEMENT is dated      November 2011 and made between:

 

(1)         THE BORROWER (as defined in the Original Facility Agreement);

 

(2)         THE GUARANTOR (as defined in the Original Facility Agreement);

 

(3)         VALIDUS REINSURANCE, LTD (the “Security Provider”);

 

(4)         ING BANK N.V., LONDON BRANCH and LLOYDS TSB BANK PLC as lenders (the “Lenders”);

 

(5)         ING BANK N.V., LONDON BRANCH and LLOYDS TSB BANK PLC as mandated lead arrangers and bookrunners (whether acting individually or together, the “Arranger”);

 

(6)         LLOYDS TSB BANK PLC as agent of the other Finance Parties other than the Security Trustee (the “Agent”); and

 

(7)         LLOYDS TSB BANK PLC as security trustee for the Secured Parties (the “Security Trustee”).

 

IT IS AGREED as follows:

 

1.           DEFINITIONS AND INTERPRETATION

 

1.1         Definitions

 

In this Agreement:

 

“Effective Date” means the date on which the Agent confirms to the Lenders and the Borrower that it has received each of the documents listed in Schedule 1 (Conditions Precedent) in a form and substance satisfactory to the Agent.

 

“Fee Letter” means a fee letter dated on or about the date of this Agreement between the Borrower and the Arranger, setting out any of the fees referred to in Clause 5 (Fees, costs and expenses).

 

“Letter of Comfort” means a comfort letter from Lloyd’s substantially in the form set out in Schedule 8 (Letter of Comfort) of the Restated Agreement with such amendments as may be requested by the Agent.

 

“Original Facility Agreement” means the $100,000,000 standby letter of credit facility agreement dated 28 November 2007 between the Borrower, the Guarantor, the Agent, the Arranger, the Security Trustee and others, as previously amended and restated by an amendment and restatement agreement dated 19 November 2009 between the Borrower, the Guarantor, the Agent, the Arranger, the Security Trustee, the Lenders as continuing lenders and  Calyon as exiting lender, and by an amendment agreement dated 2 August 2011 between the Borrower, the Guarantor, the Lenders, the Agent and the Security Trustee.

 

“Restated Agreement” means the Original Facility Agreement, as amended by this Agreement, the terms of which are set out in Schedule 2 (Restated Agreement).

 

1

 

1.2         Incorporation of defined terms

 

(a)           Unless a contrary indication appears, a term defined in the Original Facility Agreement has the same meaning in this Agreement.

 

(b)           The principles of construction set out in the Original Facility Agreement shall have effect as if set out in this Agreement.

 

1.3         Clauses

 

In this Agreement any reference to a “Clause” or a “Schedule” is, unless the context otherwise requires, a reference to a Clause or a Schedule to this Agreement.

 

1.4         Third party rights

 

A person who is not a party to this Agreement 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.

 

1.5         Designation

 

In accordance with the Original Facility Agreement, each of the Borrower and the Agent designates this Agreement as a Finance Document.

 

2.           RESTATEMENT

 

With effect from the Effective Date, the Original Facility Agreement shall be amended and restated so that it shall be read and construed for all purposes as set out in Schedule 2 (Restated Agreement).

 

3.           REPRESENTATIONS

 

The Representations (as set out in the Original Facility Agreement) are deemed to be made by each Obligor (by reference to the facts and circumstances then existing) on the date of this Agreement and the Representations (as set out in the Restated Agreement) are deemed to be made by each Obligor (by reference to the facts and circumstances then existing) on the Effective Date.

 

4.           CONTINUITY AND FURTHER ASSURANCE

 

4.1         Continuing obligations

 

The provisions of the Original Facility Agreement and the other Finance Documents shall, save as amended by this Agreement, continue in full force and effect.

 

4.2         Confirmation of guarantee obligations

 

For the avoidance of doubt, the Guarantor confirms  for the benefit of the Finance Parties that its guarantee to each Finance Party of the punctual performance by each other Obligor of all of that Obligor’s obligations under the Finance Documents and its indemnity to the Finance Parties each as set out in clause 19 (Guarantee and Indemnity) of the Original Facility Agreement:

 

(a)           remain in full force and effect notwithstanding the amendments referred to in Clause 2 (Restatement); and

 

2

 

(b)           extend to any new obligations assumed by any Obligor under the Finance Documents as a result of this Agreement (including, but not limited to, under the Restated Agreement).

 

4.3         Confirmation of Security

 

For the avoidance of doubt, each of the Guarantor and the Security Provider confirms for the benefit of the Finance Parties that the Security created by it pursuant to each Security Document to which it is a party shall:

 

(a)           remain in full force and effect notwithstanding the amendments referred to in Clause 2 (Restatement); and

 

(b)           continue to secure the Secured Obligations under the Finance Documents as amended (including, but not limited to, under the Restated Agreement).

 

4.4         Further Assurance

 

Each Obligor, shall, at the request of the Agent and at such Obligor’s own expense, do all such acts and things necessary or desirable to give effect to the amendments effected or to be effected pursuant to this Agreement.

 

5.           FEES, COSTS AND EXPENSES

 

5.1         Structuring Fee

 

The Borrower shall pay to Lloyds TSB Bank plc in its capacity as Arranger the structuring fees specified in a Fee Letter between Lloyds TSB Bank plc in its capacity as Arranger and the Borrower at the times, and in the amounts, specified in such letter.

 

5.2         Participation Fee

 

The Borrower shall pay to the Arranger the participation fees specified in a Fee Letter between the Arranger and the Borrower at the times, and in the amounts, specified in such letter.

 

5.3         Agency Fee

 

The Borrower shall pay to the Agent for its own account, the agency fees payable in accordance with clause 16.4 (Agency Fees) of the Restated Agreement.

 

5.4         Transaction expenses

 

Whether or not the Effective Date occurs, the Borrower shall promptly, within five Business Days of demand, pay the Agent, the Arranger and the Security Trustee the amount of all costs and expenses (including, but not limited to, legal fees and disbursements) reasonably incurred by any of them (and, in the case of the Security Trustee, by any Receiver or Delegate) in connection with the negotiation, preparation, printing and execution of this Agreement and any other documents referred to in this Agreement.

 

3

 

6.           MISCELLANEOUS

 

6.1         Incorporation of terms

 

The provisions of clause 34 (Notices), clause 36 (Partial Invalidity), clause 37 (Remedies and waivers) and clause 42 (Enforcement) of the Original Facility Agreement shall be incorporated into this Agreement as if set out in full in this Agreement and as if references in those clauses to “this Agreement” or “the Finance Documents” are references to this Agreement.

 

6.2         Counterparts

 

This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.

 

7.           GOVERNING LAW

 

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.

 

This Agreement has been entered into on the date stated at the beginning of this Agreement.

 

4

 

SCHEDULE 1       
 CONDITIONS PRECEDENT

 

1.           Corporate Documents

 

(a)           A copy of the constitutional documents of each Obligor and each other member of the Group that is party to this Agreement or a certificate from a director or officer of the Guarantor confirming that its constitutional documents and those of the other Obligors delivered to the Agent in connection with the Original Facility Agreement have not been amended and remain correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.

 

(b)           A copy of a resolution of the board of directors of each Obligor and each other member of the Group that is party to this Agreement:

 

(i)       approving the terms of, and the transactions contemplated by, this Agreement and the Fee Letters to which it is a party, and resolving that it execute this Agreement and the Fee Letters to which it is a party;

 

(ii)      authorising a specified person or persons to execute this Agreement and the Fee Letters to which it is a party on its behalf; and

 

(iii)     authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilisation Request) to be signed and/or despatched by it under or in connection with this Agreement and the Fee Letters to which it is a party.

 

(c)           A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above.

 

(d)           A certificate of the Guarantor (signed by a director or officer of the Guarantor) confirming that neither the execution, delivery and performance by the Guarantor or any of its Significant Subsidiaries that is party to this Agreement of this Agreement nor compliance with the terms and provisions thereof, nor the consummation of the transactions contemplated therein:

 

(i)       will contravene any applicable provision of any law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality;

 

(ii)      will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (other than Liens in favour of the Security Trustee pursuant to the Security Documents) upon any of its property or

 

5

 

assets or those of any of its Significant Subsidiaries pursuant to the terms of any material indenture, mortgage, deed of trust, loan agreement, credit agreement or any other material instrument to which it or any of its Significant Subsidiaries is a party or by which it or any of its property or assets are bound or to which it may be subject; or

 

(iii)     will violate any provision of its certificate of incorporation, by-laws or other organisational documents, nor those of its Significant Subsidiaries.

 

(e)           A copy of a resolution of the Guarantor in its capacity as holder of the outstanding shares of the Security Provider, approving the terms of, and the transactions contemplated by, this Agreement.

 

(f)            A certificate of the Guarantor (signed by a director or officer of the Guarantor) certifying that each copy document delivered to the Agent pursuant to paragraphs 1(a), 1(b), 1(e) and 3(c) of this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.

 

2.           Legal opinions

 

(a)           A legal opinion of Clifford Chance LLP, legal advisers to the Arranger and the Agent in England, substantially in the form distributed to the Lenders prior to signing this Agreement.

 

(b)           A legal opinion of Conyers, Dill & Pearman, legal advisers to the Arranger and the Agent in Bermuda, substantially in the form distributed to the Lenders prior to signing this Agreement.

 

3.           Other documents and evidence

 

(a)           A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Finance Document or for the validity and enforceability of any Finance Document.

 

(b)           Evidence that all actual or contingent liabilities under each Letter of Credit issued under the Original Facility Agreement have been or will be irrevocably discharged and released and that each such Letter of Credit has been cancelled and returned to the Agent no later than the Effective Date.

 

(c)           The unaudited consolidated financial statements of the Borrower for its financial year ended 31 December 2010.

 

(d)           The audited consolidated financial statements of the Guarantor for its financial year ended 31 December 2010.

 

6

 

(e)           The executed Fee Letters and evidence that all fees, costs and expenses payable pursuant to those letters and pursuant to Clause 5 (Fees, costs and expenses) have been or will be paid.

 

(f)            A statement provided by the Bank of New York in relation to the value of the collateral in the Collateral Accounts as of the date of this Agreement.

 

(g)           Evidence that the Security Provider has an A.M. Best financial strength rating of at least “A-”.

 

(h)           The Letter of Comfort.

 

(i)            The Business Plan.

 

7

 

SCHEDULE 2

RESTATED AGREEMENT

 

8

 

	

    	
 
    	
CLIFFORD CHANCE LLP
    

 

DATED 28 NOVEMBER 2007

 

TALBOT HOLDINGS LTD.

AS ORIGINAL BORROWER

 

VALIDUS HOLDINGS, LTD.

AS ORIGINAL GUARANTOR

 

LLOYDS TSB BANK PLC

AND

ING BANK N.V., LONDON BRANCH

AS MANDATED LEAD ARRANGERS

 

ING BANK N.V., LONDON BRANCH

AS STRUCTURING AGENT

 

LLOYDS TSB BANK PLC

AS AGENT

 

AND

 

LLOYDS TSB BANK PLC

AS SECURITY TRUSTEE

 

 

$25,000,000 STANDBY LETTER OF CREDIT 
 FACILITY AGREEMENT (AS AMENDED AND RESTATED
 PURSUANT TO AN AMENDMENT AND RESTATEMENT
 AGREEMENT DATED 19 NOVEMBER 2009, AN
 AMENDMENT AGREEMENT DATED 2 AUGUST 2011 AND
 AN AMENDMENT AND RESTATEMENT
 AGREEMENT DATED 18 NOVEMBER 2011)

 

 

 

CONTENTS

 

	
Clause
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Definitions And   Interpretation
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
The Facility
    	
28
    
	
 
    	
 
    	
 
    
	
3.
    	
Utilisation Of The Facility
    	
30
    
	
 
    	
 
    	
 
    
	
4.
    	
Letter Of Credit Commission
    	
34
    
	
 
    	
 
    	
 
    
	
5.
    	
Market Disruption And   Alternative Interest Rates
    	
34
    
	
 
    	
 
    	
 
    
	
6.
    	
Notification
    	
35
    
	
 
    	
 
    	
 
    
	
7.
    	
Borrower’s Indemnity To The   Lenders
    	
36
    
	
 
    	
 
    	
 
    
	
8.
    	
Prepayment And Cancellation
    	
38
    
	
 
    	
 
    	
 
    
	
9.
    	
Collateralisation Of Letters   Of Credit
    	
39
    
	
 
    	
 
    	
 
    
	
10.
    	
Commitment Increase Request
    	
39
    
	
 
    	
 
    	
 
    
	
11.
    	
Tax Gross Up And Indemnities
    	
43
    
	
 
    	
 
    	
 
    
	
12.
    	
Increased Costs
    	
46
    
	
 
    	
 
    	
 
    
	
13.
    	
Illegality
    	
48
    
	
 
    	
 
    	
 
    
	
14.
    	
Other Indemnities
    	
48
    
	
 
    	
 
    	
 
    
	
15.
    	
Mitigation
    	
50
    
	
 
    	
 
    	
 
    
	
16.
    	
Commitment Commission And   Fees
    	
51
    
	
 
    	
 
    	
 
    
	
17.
    	
Costs And Expenses
    	
52
    
	
 
    	
 
    	
 
    
	
18.
    	
Default Interest And Break   Costs
    	
53
    
	
 
    	
 
    	
 
    
	
19.
    	
Guarantee And Indemnity
    	
56
    
	
 
    	
 
    	
 
    
	
20.
    	
Representations
    	
60
    
	
 
    	
 
    	
 
    
	
21.
    	
Information Undertakings
    	
68
    
	
 
    	
 
    	
 
    
	
22.
    	
Financial Condition
    	
73
    
	
 
    	
 
    	
 
    
	
23.
    	
General Undertakings
    	
76
    
	
 
    	
 
    	
 
    
	
24.
    	
Events Of Default
    	
90
    
	
 
    	
 
    	
 
    
	
25.
    	
Changes To The Lenders
    	
95
    
	
 
    	
 
    	
 
    
	
26.
    	
Changes To The Obligors
    	
99
    
	
 
    	
 
    	
 
    
	
27.
    	
Role Of The Agent And The Arranger
    	
102
    
	
 
    	
 
    	
 
    
	
28.
    	
Role Of Security Trustee
    	
107
    
	
 
    	
 
    	
 
    
	
29.
    	
Conduct Of Business By The   Finance Parties
    	
115
    
	
 
    	
 
    	
 
    
	
30.
    	
Sharing Among The Finance   Parties
    	
115
    
	
 
    	
 
    	
 
    
	
31.
    	
Payment Mechanics
    	
118
    
	
 
    	
 
    	
 
    
	
32.
    	
Set-Off
    	
121
    
				

 

 

	
33.
    	
Application Of Proceeds
    	
121
    
	
 
    	
 
    	
 
    
	
34.
    	
Notices
    	
122
    
	
 
    	
 
    	
 
    
	
35.
    	
Calculations And   Certificates
    	
125
    
	
 
    	
 
    	
 
    
	
36.
    	
Partial Invalidity
    	
125
    
	
 
    	
 
    	
 
    
	
37.
    	
Remedies And Waivers
    	
125
    
	
 
    	
 
    	
 
    
	
38.
    	
Counterparts
    	
126
    
	
 
    	
 
    	
 
    
	
39.
    	
Amendments And Waivers
    	
126
    
	
 
    	
 
    	
 
    
	
40.
    	
Counterparts
    	
127
    
	
 
    	
 
    	
 
    
	
41.
    	
Governing Law
    	
128
    
	
 
    	
 
    	
 
    
	
42.
    	
Enforcement
    	
128
    
	
 
    	
 
    	
 
    
	
43.
    	
Confidentiality
    	
128
    
	
 
    	
 
    	
 
    
	
Schedule   1 THE ORIGINAL LENDERS
    	
133
    
	
 
    	
 
    
	
Schedule   2 CONDITIONS PRECEDENT
    	
134
    
	
Part A   Conditions Precedent To Initial Utilisation
    	
134
    
	
Part B   Conditions Precedent Required To Be Delivered By An Additional Obligor
    	
137
    
	
 
    	
 
    
	
Schedule   3 FORM OF UTILISATION REQUEST
    	
139
    
	
 
    	
 
    
	
Schedule   4 FORM OF TRANSFER CERTIFICATE
    	
140
    
	
 
    	
 
    
	
Schedule   5 FORM OF CREDIT INSTITUTION   CONFIRMATION
    	
143
    
	
 
    	
 
    
	
Schedule   6 FORM OF LETTER OF CREDIT
    	
144
    
	
 
    	
 
    
	
Schedule   7 MANDATORY COSTS RATE
    	
149
    
	
 
    	
 
    
	
Schedule   8 LETTER OF COMFORT
    	
152
    
	
 
    	
 
    
	
Schedule   9 ELIGIBLE COLLATERAL TABLE
    	
153
    
	
 
    	
 
    
	
Schedule 10 FORM OF BORROWING BASE   CERTIFICATE
    	
154
    
	
 
    	
 
    
	
Schedule 11 EXISTING LIENS
    	
156
    
	
 
    	
 
    
	
Schedule   12 EXISTING INTERCOMPANY ARRANGEMENTS   AND AGREEMENTS
    	
157
    
	
 
    	
 
    
	
Schedule 13 PERMITTED SUBSIDIARY   INDEBTEDNESS
    	
158
    
	
 
    	
 
    
	
Schedule 14 SUBSIDIARIES
    	
159
    
	
 
    	
 
    
	
Schedule 15 EXISTING AFFILIATE   TRANSACTIONS
    	
161
    
	
 
    	
 
    
	
Schedule 16 ADDITIONAL LENDER ACCESSION   LETTER
    	
162
    
	
 
    	
 
    
	
Schedule 17 FORM OF OBLIGOR ACCESSION   LETTER
    	
164
    
	
 
    	
 
    
	
Schedule 18 FORM OF OBLIGOR   RESIGNATION LETTER
    	
166
    

 

 

	
Schedule 19 SPECIFIED AMENDMENTS
    	
167
    
	
 
    	
 
    
	
1.
    	
Amendment To Clause 21 (Information Undertaking)
    	
167
    
	
 
    	
 
    	
 
    
	
2.
    	
Amendments To Clause 22.1 (Financial Condition)
    	
168
    
	
 
    	
 
    	
 
    
	
3.
    	
Amendments To Clause 22.2 (Financial Defninitions)
    	
168
    
	
 
    	
 
    	
 
    
	
SIGNATURES
    	
169
    

 

 

THIS AGREEMENT is made on 28 November 2007

 

BETWEEN

 

(1)         TALBOT HOLDINGS LTD. as original borrower (the “Original Borrower”);

 

(2)         VALIDUS HOLDINGS, LTD. as original guarantor (the “Original Guarantor”);

 

(3)         ING BANK N.V., LONDON BRANCH and LLOYDS TSB BANK PLC as mandated lead arranger(s) (whether acting individually or together, the “Arranger”);

 

(4)         ING BANK N.V. as structuring agent (the “Structuring Agent”);

 

(5)         LLOYDS TSB BANK PLC as agent of the other Finance Parties other than the Security Trustee (the “Agent”);

 

(6)         LLOYDS TSB BANK PLC as Security Trustee for the Secured Parties (the “Security Trustee”); and

 

(7)         THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The Original Lenders) as lenders (the “Original Lenders”).

 

WHEREAS:

 

In support of the obligations of the Borrowers under their 2012 and 2013 underwriting years’ letter of credit facility procurement agreements and capital stack arrangements with Talbot 2002 Underwriting Capital Ltd., Validus Holdings, Ltd., as Original Guarantor, and Talbot Holdings Ltd., as Original Borrower, enter into this Agreement.

 

ACCORDINGLY, IT IS AGREED as follows.

 

SECTION 1
 INTERPRETATION

 

1.           DEFINITIONS AND INTERPRETATION

 

1.1         Definitions

 

In this Agreement:

 

“Accepting Parties” has the meaning given to such term in Clause 10.6 (Partial approval of Commitment Increase Request).

 

“Account Party” means Talbot 2002 Underwriting Capital Ltd.

 

“Additional Borrower” means a company which becomes an Additional Borrower in accordance with Clause 26 (Changes to the Obligors).

 

“Additional Guarantor” means a company which becomes an Additional Guarantor in accordance with Clause 26 (Changes to the Obligors).

 

“Additional Lender” has the meaning given to such term in Clause 10.4 (Decline of Commitment Increase Request).

 

“Additional Lender Accession Letter” means an additional lender accession letter from 

 

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an Additional Lender to the Agent substantially in the form set out in Schedule  16 (Additional Lender Accession Letter).

 

“Additional Obligor” means an Additional Borrower or an Additional Guarantor.

 

“Advance Rate” means, for any category of Cash or obligation or investment specified in Schedule 9 (Eligible Collateral Table) in the column entitled “Cash and Eligible Securities” in the Eligible Collateral Table (other than Cash, the “Eligible Securities”), the percentage set forth opposite such category of Cash or Eligible Securities in the column entitled “Advance Rate” of the Eligible Collateral Table and, in each case, subject to the original term to maturity criteria set forth therein.

 

“Affiliate” means, with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified.

 

“Agent’s Spot Rate of Exchange” means the Agent’s spot rate of exchange for the purchase of the relevant currency with the Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day.

 

“A.M. Best” means A.M. Best Company and its successors.

 

“Amendment Agreement” means the amendment and restatement agreement dated 18  November 2011 between the Parties relating to this Agreement.

 

“Applicable Insurance Regulatory Authority” means, when used with respect to any Regulated Insurance Company:

 

(a)             the insurance department or similar administrative authority or agency located in each state or jurisdiction (foreign or domestic) in which such Regulated Insurance Company is domiciled; or

 

(b)            to the extent asserting regulatory jurisdiction over such Regulated Insurance Company, the insurance department, authority or agency in each state or jurisdiction (foreign or domestic) in which such Regulated Insurance Company is licensed,

 

and shall include any federal or national insurance regulatory department, authority or agency that may be created and that asserts insurance regulatory jurisdiction over such Regulated Insurance Company.

 

“Approved Credit Institution” means a credit institution within the meaning of the First Council Directive on the co-ordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions (No. 77/780/EEC) which has been approved by the Council of Lloyd’s for the purpose of providing guarantees and issuing or confirming letters of credit comprised (or to be comprised) in a member’s Funds at Lloyd’s.

 

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

 

2

 

“Authorised Signatory” means, in relation to an Obligor, any person who is duly authorised (in such manner as may be reasonably acceptable to the Agent) and in respect of whom the Agent has received a certificate signed by a director or another Authorised Signatory of such Obligor setting out the name and signature of such person and confirming such person’s authority to act.

 

“Availability Period” means the period commencing on the date of this Agreement and ending on 31 December 2012.

 

“Available Commitment” means, in relation to a Lender at any time and save as otherwise provided herein its Commitment less the Base Currency Amount of its share of the Outstandings at such time provided that such amount shall not be less than zero.

 

“Available Facility” means, at any time, the aggregate of the Available Commitments adjusted, in the case of a proposed utilisation, so as to take into account:

 

(a)             any reduction in the Commitment of a Lender pursuant to the terms hereof;

 

(b)            the Base Currency Amount of any Letter of Credit which pursuant to any other utilisation, is to be issued; and

 

(c)             the Base Currency Amount of any Letter of Credit which is due to expire or returned as cancelled,

 

on or before the proposed Utilisation Date relating to such utilisation.

 

“Base Currency” means dollars.

 

“Base Currency Amount” means, in relation to a Letter of Credit, the amount specified in the Utilisation Request for that Letter of Credit (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Agent’s Spot Rate of Exchange on the date which is three Business Days before the Utilisation Date or, if later, on the date the Agent receives the Utilisation Request).

 

“Bermuda Companies Law” means the Companies Act 1981 of Bermuda as amended from time to time including every modification, reenactment or revision thereof for the time being in force.

 

“Borrower” means the Original Borrower or an Additional Borrower unless it has ceased to be a Borrower in accordance with Clause 26 (Changes to the Obligors).

 

“Borrowing  Base” means, at any time, the aggregate amount of Cash and Eligible Securities held in the Collateral Accounts under the Security Agreement at such time multiplied in each case by the respective Advance Rates for Cash and such Eligible Securities (the value of Eligible Securities at any time being determined on the basis of the Borrowing Base Report (as defined in the Security Agreement) then most recently prepared by the Special Report Agent) provided that all Cash and Eligible Securities in respect of any Borrowing Base shall only be included in such Borrowing Base to the extent the same are subject to a first priority perfected security interest in favour of the Security Trustee pursuant to the Security Documents.

 

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“Borrowing Base Certificate” means a Borrowing Base Certificate substantially in the form set out in Schedule 10 (Form of Borrowing Base Certificate) or in such other form reasonably acceptable to the Agent.

 

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

 

“Business Plan” means the 2012 business plan of the Original Guarantor, a copy of which has been provided to the Agent pursuant to paragraph 3(i) of Schedule 1 (Conditions Precedent) of the Amendment Agreement.

 

“Capital Lease Obligations” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“Capital Markets Product” means, as to any person, any security, commodity, derivative transaction or other financial or similar product purchased, sold or entered into by such person for the purpose of a third-party undertaking or assuming one or more risks otherwise assumed by such person or entered into by such person for the purpose of managing one or more risks otherwise assumed by such person or other agreements or arrangements entered into by such person designed to transfer credit risk from one party to another, including:

 

(a)             any structured insurance product, catastrophe bond, rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, commodity hedge, equity or equity index swap, equity or equity index option, bond option, interest rate option or hedge, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or swap transaction, credit protection transaction, credit swap, credit default swap (including single default, single-name, basket and first-to-default swaps), credit default option, equity default swap, total return swap, credit-linked notes, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sellback transaction, securities lending transaction, weather index transaction, emissions allowance transaction, or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions);

 

(b)            any transaction which is a type of transaction that is similar to any transaction referred to in paragraph (a) above that is currently, or in the future becomes, recurrently entered into in the financial markets;

 

(c)             any combination of the transactions referred to in paragraphs (a) and (b) above; and

 

(d)            any master agreement relating to any of the transactions referred to in paragraphs (a), (b) or (c) above.

 

“Cash” means the category of “Cash” described in the definition of Advance Rate.

 

“Cash Equivalents” means, as to any person:

 

4

 

(a)             securities issued or directly and fully guaranteed or insured by the US or any agency or instrumentality thereof (provided that the full faith and credit of the US is pledged in support thereof) having maturities of not more than one year from the date of acquisition;

 

(b)            time deposits and certificates of deposit of any commercial bank having, or which is the principal banking subsidiary of a bank holding company organised under the laws of the US, any state thereof, the District of Columbia or any foreign jurisdiction having, capital, surplus and undivided profits aggregating in excess of $200,000,000, with maturities of not more than one year from the date of acquisition by such person;

 

(c)             repurchase obligations with a term of not more than 90 days for underlying securities of the types described in paragraph (a) above entered into with any bank meeting the qualifications specified in paragraph (b) above;

 

(d)            commercial paper rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in each case maturing not more than one year after the date of acquisition by such person;

 

(e)             obligations of obligors organised outside the US (including sovereign nations), which obligations are correlative in type, maturity and rating as those set forth in paragraphs (a) through (d) above; and

 

(f)             investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940 of the US, as amended, substantially all of whose assets are comprised of securities of the types described in paragraphs (a) through (e) above.

 

“Change of Control” means the occurrence of any of the following events or conditions:

 

(a)             the Original Borrower or Validus Reinsurance, Ltd. cease to be a Wholly-Owned Subsidiary of the Original Guarantor;

 

(b)             any person, including any syndicate or group deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of capital stock of the Original Guarantor entitling such person to exercise 50% or more of the total voting power of all shares of capital stock of the Original Guarantor that is entitled to vote generally in elections of directors, other than an acquisition by the Original Guarantor, any of its subsidiaries or any employee benefit plans of the Original Guarantor; or

 

(c)             a majority of the members of the Original Guarantor’s board of directors are persons who are then serving on the board of directors without having been nominated or otherwise approved in writing by at least a majority of the individuals who constituted the board of directors of the Original Guarantor as of the date hereof (or their replacements as herein required)

 

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“Charged Property” means all the assets of any member of the Group which from time to time are, or are expressed to be, the subject of the Transaction Security.

 

“Citi Facility” means the uncommitted letter of credit facility pursuant to a master agreement, a pledge agreement, a collateral account control agreement, a corporate mandate and a general communications indemnity, all dated 10 August 2009 and made between Validus Reinsurance, Ltd. and Citibank Europe plc, providing for letters of credit and any modifications, amendments, restatements, waivers, extensions, renewals, replacements or refinancing thereof, provided that any such modifications, amendments, waivers, extensions, renewals, replacements or refinancing be on terms which, when taken together as a whole, are not adverse in any material respect to the interests of the Lenders, as compared to those contained in the Citi Facility as of the date hereof.

 

“Closing Date” means the Effective Date (as defined in the Amendment Agreement).

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“Collateral” means, in relation to any Lender’s Proportion of a Letter of Credit, a deposit in the Collateral Accounts and the term “Collateralised” shall be construed accordingly.

 

“Collateral Accounts” has the meaning set forth in the Control Agreement.

 

“Commitment” means:

 

(a)             in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading “Commitment” in Schedule 1 (The Original Lenders); and

 

(b)            in relation to any other Lender, the amount in the Base Currency of any Commitment transferred to it under this Agreement,

 

together with any increase in such Commitment effected in accordance with Clause 10 (Commitment Increase Request), to the extent not cancelled, reduced or transferred by it under this Agreement.

 

“Commitment Increase Fee” has the meaning given to such term in Clause 10.2 (Commitment Increase Fee).

 

“Commitment Increase Request” has the meaning given to such term in Clause 10.1.1.

 

“Confidential Information” means all information relating to the Original Borrower, the Original Guarantor, any Obligor, the Group, the Finance Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facility from either:

 

(a)             any member of the Group or any of its advisers; or

 

(b)            another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any member of the Group or any of its advisers,

 

6

 

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:

 

	
(i)
    	
 
    	
is or becomes public information other than   as a direct or indirect result of any breach by that Finance Party of Clause   43 (Confidentiality); or
    
	
 
    	
 
    	
 
    
	
(ii)
    	
 
    	
is identified in writing at the time of   delivery as non-confidential by any member of the Group or any of its   advisers; or
    
	
 
    	
 
    	
 
    
	
(iii)
    	
 
    	
is known by that Finance Party before the   date the information is disclosed to it in accordance with paragraphs (a) or   (b) above or is lawfully obtained by that Finance Party after that date,   from a source which is, as far as that Finance Party is aware, unconnected   with the Group  and which, in either   case, as far as that Finance Party is aware, has not been obtained in breach   of, and is not otherwise subject to, any obligation of confidentiality.
    

 

“Confidentiality Undertaking” means a confidentiality undertaking substantially in a recommended form of the Loan Market Association from time to time, or such other form as may be agreed between the Original Borrower and the Agent.

 

“Consolidated Indebtedness” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“Consolidated Net Worth” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“Consolidated Total Capital” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“Control” means, with respect to any person, the possession, directly or indirectly, of the power:

 

(a)                                      to vote 10% or more of the voting power of the securities having ordinary  voting power for the election of directors of such person; or

 

(b)                                     to direct or cause the direction of the management or policies of a person, whether through the ability to exercise voting power, by contract or otherwise,

 

and “Controlling” and “Controlled” have meanings correlative thereto.

 

“Control Agreement” has the meaning set forth in the Security Agreement.

 

“Corporate Member” means the Account Party, being a corporate member of Lloyd’s.

 

“Credit Institution Confirmation” means the confirmation in form and substance satisfactory to Lloyd’s and substantially in the form set out in Schedule 5 (Form of Credit Institution Confirmation).

 

“Custodian” means custodian under the Control Agreement and the Security Agreement.

 

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“Declined Amount” has the meaning given to such term in Clause 10.4 (Decline of Commitment Increase Request).

 

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

 

“Defaulting Lender” means any Lender that has:

 

(a)                                      failed to fund any portion of its participations in Letters of Credit within three (3) Business Days of the date required to be funded by it hereunder;

 

(b)                                     notified the Original Borrower or the Agent in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements generally in which it commits to extend credit; or

 

(c)                                      (i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar person charged with reorganisation or liquidation of its business or custodian, appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar person charged with reorganisation or liquidation of its business or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such  proceeding or appointment.

 

“Delegate” means any delegate, agent, attorney or co-Security Trustee appointed by the Security Trustee.

 

“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

 

8

 

(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.

 

“DTC” means the Depository Trust Company.

 

“Eligible Collateral Table” means the table set out in Schedule 9 (Eligible Collateral Table).

 

“Eligible Investment Grade  Securities” means the following categories of Eligible Securities in the column entitled “Advance Rate” of the Eligible Collateral Table:

 

(a)                                      Investment Grade Municipal Bonds; and

 

(b)                                     Investment Grade Non-Convertible U.S. Corporate Bonds.

 

“Eligible Securities” has the meaning provided in the definition of the term “Advance Rate”.

 

“Environmental Law” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

 

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Original Guarantor or any subsidiary directly or indirectly  resulting from or based upon:

 

(a)                                      its violation of any Environmental Law;

 

(b)                                     its generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials;

 

(c)                                      its exposure to any Hazardous Materials;

 

(d)                                     its release or threatened release of any Hazardous Materials into the environment; or

 

(e)                                      any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing,

 

but in each of (a) through (e) excluding liabilities arising out of Capital Markets Products and insurance and reinsurance contracts, agreements and arrangements in each case entered into in the ordinary course of business and not for speculative purposes.

 

“Equity Interests” means, with respect to any person, shares of capital stock of (or other ownership or profit interests in) such person, warrants, options or other rights for the purchase or other acquisition from such person of shares of capital stock of (or other 

 

9

 

ownership or profit interests in) such person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such person or warrants, rights or options for the purchase or other acquisition from such person of such shares (or such other interests), and other ownership or profit interests in such person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorised or otherwise existing on any date of determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974 of the US, as amended from time to time and the regulations promulgated and rulings issued thereunder.

 

“ERISA  Affiliate” means any corporation or trade or business which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Original Guarantor or any of its subsidiaries or is under common control (within the meaning of Section 414(c) of the Code) with the Original Guarantor or any of its subsidiaries.

 

“Event of Default” means any circumstance described as such in Clause 24 (Events of Default) other than Clause 24.14 (Acceleration and Cancellation).

 

“Existing  Affiliate  Transactions” means the transactions set forth on Schedule 15 (Existing Affiliate Transactions).

 

“Existing Facility” means the $30,000,000 standby letter of credit facility dated 25 November 2003 (as amended and restated by amendment and restatement agreements dated 23 November 2004, 25 November 2005, 2 March 2006 and 29 November 2006  and an amendment letter dated 28 June 2007) and entered into between the Original Borrower as parent, the Account Party and Talbot Underwriting Holdings Ltd as guarantors and Lloyds TSB Bank plc as bank.

 

“Expiry Date” means, in relation to any Letter of Credit, the date on which the maximum aggregate liability thereunder is to be reduced to zero.

 

“Facility” means the letter of credit facility granted to the Borrowers in this Agreement.

 

“Facility Office” means, in relation to the Agent, the office identified with its signature below or such other office as it may select by notice and, in relation to any Lender, the office notified by it to the Agent in writing prior to the date hereof (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee) or such other office as it may from time to time select by notice to the Agent.

 

“Fee Letter” means any letter or letters dated on or about the date of this Agreement between the Original Borrower and the Arrangers (or the Agent and the Original Borrower, the Security Trustee and the Original Borrower or the Structuring Agent and the Original Borrower), setting out any of the fees referred to in Clause 16 (Commitment Commission and fees).

 

“Finance Documents” means this Agreement, any Fee Letter, any Obligor Accession Letter, any Obligor Resignation Letter, the Security Documents and any other document 

 

10

 

designated in writing as a “Finance Document” by the Agent and the Original Borrower.

 

“Finance Parties” means the Agent, the Structuring Agent, the Security Trustee, the Arrangers and the Lenders.

 

“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of a Borrower or a Guarantor.

 

“Five-Year Secured Letter of Credit Facility” means the $500,000,000 five-year secured letter of credit facility dated 12 March 2007 between Validus Holdings, Ltd., Validus Reinsurance, Ltd., JPMorgan Chase Bank, National Association, as administrative agent and others, including the related instruments and agreements executed in connection therewith, and amendments, renewals, replacements, refinancings and restatements to any of the foregoing.

 

“Foreign Pension Plan” means any plan, fund (including any superannuation fund) or other similar program established or maintained outside the US by the Original Guarantor or any one or more of its subsidiaries primarily for the benefit of employees of the Original Guarantor or such subsidiaries residing outside the US, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.

 

“Fronting Arrangement” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“FSA Handbook” means the UK Financial Services Authority Handbook of Rules and Guidance (as amended from time to time).

 

“Funds at Lloyd’s” has the meaning given to it in paragraphs 16 and 17 of the Membership Byelaw (No. 5 of 2005).

 

“GAAP” means US GAAP, or, in relation to subsidiaries of the Original Guarantor which are incorporated in England and Wales, UK GAAP.

 

“General Prudential Sourcebook” means the General Prudential Sourcebook for Banks, Building Societies, Insurers and Investment Firms (as amended and replaced from time to time), which forms part of the FSA Handbook.

 

“Governmental Authority” means the government of the US, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“Group” means the Original Guarantor and its subsidiaries for the time being.

 

“Guarantee” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“Guarantor” means the Original Guarantor or an Additional Guarantor unless it has ceased to be a Guarantor in accordance with Clause 26 (Changes to the Obligors).

 

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“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 and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Hybrid Capital” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“Increase Date” has the meaning given to such term in Clause 10.7 (Increase Date).

 

“Indebtedness” of any person means, without duplication:

 

(a)                                      all obligations of such person for borrowed money or with respect to deposits or advances of any kind;

 

(b)                                     all obligations of such person evidenced by bonds, debentures, notes or similar instruments;

 

(c)                                      all obligations of such person upon which interest charges are customarily paid and treated as interest expense under GAAP;

 

(d)                                     all obligations of such person under conditional sale or other title retention agreements relating to property acquired by such person;

 

(e)                                      all obligations of such person in respect of the deferred purchase price of property or services (excluding current ordinary course trade accounts payable);

 

(f)                                        all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such person, whether or not the Indebtedness secured thereby has been assumed, provided that the amount of Indebtedness of such person shall be the lesser of (i) the fair market value of such property at such date of determination (determined in good faith by the Original Guarantor) and (ii) the amount of such Indebtedness of such other person;

 

(g)                                     all Guarantees by such person of Indebtedness of others;

 

(h)                                     all Capital Lease Obligations of such person;

 

(i)                                         all obligations (or to the extent netting is permitted under the applicable agreement governing such Capital Markets Products and such netting is limited with respect to the counterparty or counterparties of such agreement, all net termination obligations) of such person under transactions in Capital Markets Products; and

 

(j)                                         all reimbursement obligations of such person in respect of letters of credit, letters of guaranty, bankers’ acceptances and similar credit transactions; provided that, Indebtedness shall not include any preferred (including without limitation trust preferred) or preference securities or Hybrid Capital to the 

 

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extent such preferred or preference securities or Hybrid Capital would be treated as equity under the applicable procedures and guidelines of S&P as of the date of this Agreement.

 

The Indebtedness of any person shall include the Indebtedness of any other entity (including any partnership in which such person is a general partner) to the extent such person is liable therefor as a result of such person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such person is not liable therefor. For the avoidance of doubt, Indebtedness shall not include (v) current trade payables (including current payables under insurance contracts and current reinsurance payables) and accrued expenses, in each case arising in the ordinary course of business, (w) obligations and Guarantees of Regulated Insurance Companies with respect to Policies, (x) obligations and Guarantees with respect to products underwritten by Regulated Insurance Companies in the ordinary course of business, including insurance and reinsurance policies, annuities, performance and surety bonds, assumptions of liabilities and any related contingent obligations, (y) Reinsurance Agreements and Fronting Arrangements and Guarantees thereof entered into by any Regulated Insurance Company in the ordinary course of business and (z) indebtedness arising under any Syndicate Arrangement.

 

“Insurance Business” means one or more aspects of the business of selling, issuing or underwriting insurance or reinsurance and other businesses reasonably related thereto.

 

“Insurance Contract” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“Insurance License” has the meaning given to such term in Clause 20.15 (Insurance Licenses).

 

“Integrated Prudential Sourcebook” means the Prudential Sourcebook for Insurers (as amended and replaced from time to time), which forms part of the FSA Handbook.

 

“Interest Period” means, save as otherwise provided herein, in relation to an Unpaid Sum, any of those periods mentioned in Clause 18.1 (Default Interest Periods).

 

“IPC” means IPC Holdings, Ltd., a company previously organised under the laws of Bermuda and now known as Validus Amalgamation Subsidiary, Ltd. (a company also organised under the laws of Bermuda and previously known as Validus, Ltd.), being the amalgamated company resulting from the amalgamation of IPC Holdings, Ltd. with Validus, Ltd., such amalgamation being effective as at 4 September 2009.

 

“IPC Facilities” means:

 

(a)                                      the credit agreement among IPC, IPCRe Limited, the lenders listed on the signature pages thereto, and Wachovia Bank, National Association, as administrative agent and fronting bank, providing for letter of credit in an aggregate amount of up to $250 million at any time outstanding, and any modification, amendments, restatements, waivers, extensions, renewals, replacement or refinancing thereof; and

 

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(b)                                     the letter of credit master agreement between IPCRe Limited and Citibank N.A., providing for letters of credit and any modifications, amendments, restatements, waivers, extensions, renewals, replacements or refinancing thereof,

 

provided that any such modifications, amendments, waivers, extensions, renewals, replacements or refinancing be on terms which, when taken together as a whole, are not adverse in any material respect to the interests of the Lenders, as compared to those contained in each of the IPC Facilities as of the date hereof.

 

“IPCRe Limited” means IPCRe Limited, a company organised under the laws of Bermuda.

 

“Junior Subordinated Deferrable Debentures” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“L/C Commission Rate” means:

 

(a)                                      for any period in which all or any part of Borrowing Base consists of Eligible Investment Grade Securities, 0.50 per cent. per annum; and

 

(b)                                     at any other time, 0.40 per cent. per annum.

 

“Legal Requirements” means all applicable laws, rules and regulations and interpretations thereof made by any governmental body or regulatory authority (including any Applicable Insurance Regulatory Authority) having jurisdiction over any member of the Group.

 

“Legal Reservations” means:

 

(a)                                      the principle that equitable remedies may be granted or refused at the discretion of a court and the limitations imposed by laws relating to bankruptcy, insolvency, liquidation, reorganisation, court schemes, moratoria, administration and other laws generally affecting the rights of creditors or (as the case may be) secured creditors;

 

(b)                                     the time barring of claims, the possibility that an undertaking to assume liability for or to indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;

 

(c)                                      similar principles, rights and defences under the laws of any other jurisdiction; and

 

(d)                                     any other matters which are set out as qualifications or reservations as to matters of law of general application in the legal opinions delivered to any of the Finance Parties in connection with the Finance Documents.

 

“Lender” means any financial institution:

 

(a)                                      named in Schedule 1 (The Original Lenders); or

 

(b)                                     which has become a party hereto in accordance with Clause 25 (Changes to the Lenders),

 

14

 

and which has not ceased to be a party hereto in accordance with the terms hereof.

 

“Lender’s Proportion” means, in relation to a Letter of Credit, the proportion which that Lender’s participation in that Letter of Credit bears to the participation of all the Lenders, determined in accordance with Clause 3.4 (Each Lender’s Participation in Letters of Credit).

 

“Letter of Comfort” means a comfort letter from Lloyd’s substantially in the form set out in Schedule 8 (Letter of Comfort) or with such amendments as may be requested by the Original Borrower and/or Lloyd’s and reasonably approved by the Agent.

 

“Letter of Credit” means a letter of credit issued or to be issued pursuant to Clause 3 (Utilisation of the Facility) substantially in the form set out in Schedule 6 (Form of Letter of Credit) or in such other form requested by the Original Borrower which is  approved by the Lenders (such approval not to be unreasonably withheld).

 

“Leverage Ratio” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“LIBOR” means, in relation to any Unpaid Sum on which interest for a given period is to accrue:

 

(a)                                      the percentage rate per annum equal to the offered quotation which appears on the appropriate page of the Reuters screen which displays the British Bankers Association Interest Settlement Rate for the relevant currency for such period; or

 

(b)                                     if such page or such service shall cease to be available, the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the London Interbank market

 

at 11.00 a.m. on the Quotation Date for such period and, if any such rate is below zero, LIBOR will be deemed to be zero.

 

“Lien” means, with respect to any asset:

 

(a)                                      any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset;

 

(b)                                     the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset; and

 

(c)                                      in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

“Lloyd’s” means the society incorporated by Lloyd’s Act 1871 by the name of Lloyd’s.

 

“Lloyd’s Trust Deed” means a trust deed in the form prescribed by Lloyd’s for execution by a member, or any other member of the Group which provides Own FAL on 

 

15

 

behalf of a member, in respect of that member’s insurance business.

 

“Lloyd’s Trust Fund” means a fund held on the terms of a Lloyd’s Trust Deed.

 

“Majority Lenders” means, save as otherwise provided herein a Lender or Lenders whose Commitments amount (or, if each Lender’s Commitment has been reduced to zero, did immediately before such reduction to zero, amount) in aggregate to more than 50 per cent. of the Total Commitments provided that:

 

(a)                                      so long as a Lender is a Defaulting Lender, the Commitments of such Lender shall not be included in determining whether the Majority Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Clause 38 (Amendments and Waivers)); and

 

(b)                                     any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender.

 

“Managed Syndicate” means Syndicate 1183 at Lloyd’s, which is currently under the management of the Managing Agent.

 

“Managing Agent” means Talbot Underwriting Ltd.

 

“Mandatory Costs Rate” means the percentage rate per annum calculated by the Agent in accordance with Schedule 7 (Mandatory Costs Rate).

 

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

 

(a)                                      the business, operations, assets, liabilities or financial condition of the Group taken as a whole;

 

(b)                                     the ability of the Obligors or any other member of the Group that is party to any Finance Document to perform their material or payment obligations under the Finance Documents; or

 

(c)                                      the validity or enforceability of the Finance Documents or the rights or remedies of any Finance Party under the Finance Documents.

 

“Merger Financing” means Indebtedness of the Original Guarantor or any subsidiary of the Original Guarantor permitted to be incurred pursuant to Clause 23.15 (Indebtedness), all or a portion of the proceeds of which are used to consummate the Transatlantic Acquisition, and any amendment, renewal, replacement, refinancing or restatement thereof.

 

“Minimum Consolidated Net Worth Amount” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Multiemployer Plan” means any multiemployer plan as defined in Section 4001(a)(3) of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) the Original Guarantor, or any ERISA Affiliate, and each such plan for the

 

16

 

 

five year period immediately following the latest date on which the Original Guarantor or such ERISA Affiliate contributed to or had an obligation to contribute to such plan.

 

“NAIC” means the National Association of Insurance Commissioners or any successor thereto.

 

“Net Income” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“Net Worth” means, as to any person, the sum of its capital stock (including its preferred stock), capital in excess of par or stated value of shares of its capital stock (including its preferred stock), retained earnings and any other account which, in accordance with US GAAP, constitutes stockholders equity, but excluding:

 

(a)                                      any treasury stock; and

 

(b)                                     the amount of the effects of Financial Accounting Statement No. 115 (which amount is shown on the Original Guarantor’s 31 December 2006 balance sheet under the caption “Accumulated other comprehensive income” and which, after adoption of Financial Accounting Statements Nos. 157 and 159 will be measured as the difference between investments carried at estimated fair value and investments carried at amortised cost).

 

“Notice of Non-Extension” means a notice of the kind referred to in Clause 3.7 (Notice of Non-Extension in respect of Letters of Credit).

 

“Obligor Accession Letter” means a document substantially in the form set out in Schedule 17 (Form of Obligor Accession Letter).

 

“Obligor Resignation Letter” means a letter substantially in the form set out in Schedule 18 (Form of Obligor Resignation Letter).

 

“Obligors” means the Borrowers and the Guarantors.

 

“Optional Currency” means sterling.

 

“Original Obligor” means an Original Borrower or an Original Guarantor.

 

“Original Financial Statements” means:

 

(a)                                      in relation to the Original Borrower, its audited consolidated financial statements for its financial year ended 31 December 2006; and

 

(b)                                     in relation to the Original Guarantor, its audited consolidated financial statements for its financial year ended 31 December 2006.

 

“Outstandings” means, at any time, the Base Currency Amount of the aggregate of the maximum actual and contingent liabilities of the Lenders in respect of each outstanding Letter of Credit.

 

“Own FAL” means, in relation to the Account Party, such part of its Funds at Lloyd’s as is provided by the Account Party or any other member of the Group by way of Cash 

 

17

 

and/or investments and/or covenant and charge or otherwise as permitted by Lloyd’s from time to time (which shall be valued by Lloyd’s in accordance with Lloyd’s usual practice).

 

“Party” means a party to this Agreement.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

 

“Permitted Subsidiary Indebtedness” means:

 

(a)                                      Indebtedness of any subsidiary of the Original Guarantor under the Finance Documents or existing on the date hereof and listed on Schedule 13 (Permitted Subsidiary Indebtedness) and extensions, renewals and replacements of any such Indebtedness, provided that such extending, renewal or replacement Indebtedness:

 

	
(i)
    	
 
    	
shall not be Indebtedness of an obligor that   was not an obligor with respect to the Indebtedness being extended, renewed   or replaced;
    
	
 
    	
 
    	
 
    
	
(ii)
    	
 
    	
shall not be in a   principal amount that exceeds the principal amount of the Indebtedness being   extended, renewed or replaced (plus any accrued but unpaid interest and   redemption premium payable by the terms of such Indebtedness thereon and   reasonable refinancing or renewal expenses);
    
	
 
    	
 
    	
 
    
	
(iii)
    	
 
    	
shall not have an earlier maturity date or   shorter weighted average life than the Indebtedness being extended, renewed   or replaced; and
    
	
 
    	
 
    	
 
    
	
(iv)
    	
 
    	
shall be subordinated to   the obligations of the Guarantors in respect of this Agreement on the same   terms (if any) as the Indebtedness being extended, renewed or replaced;
    

 

(b)                                     Indebtedness of any subsidiary of the Original Guarantor incurred in the ordinary course of business in connection with any Capital Markets Product that are not entered into for speculative purposes;

 

(c)                                      Indebtedness owed by subsidiaries of the Original Guarantor to the Original Guarantor or any of its subsidiaries;

 

(d)                                     Indebtedness of any subsidiary of the Original Guarantor incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed by any subsidiary of the Original Guarantor in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, provided that:

 

	
(i)
    	
 
    	
such Indebtedness is incurred prior to or   within 90 days after such acquisition or the completion of such   construction or improvement; and
    
	
 
    	
 
    	
 
    
	
(ii)
    	
 
    	
the aggregate principal   amount of Indebtedness permitted by this paragraph (d) shall not   exceed $10,000,000 at any time outstanding;
    

 

18

 

(e)                                      Indebtedness of any subsidiary of the Original Guarantor in respect of letters of credit issued to reinsurance cedents, or to lessors of real property in lieu of security deposits in connection with leases of any subsidiary of the Original Guarantor, in each case in the ordinary course of business;

 

(f)                                        Indebtedness of any subsidiary of the Original Guarantor incurred in the  ordinary course of business in connection with workers’ compensation claims, self-insurance obligations, unemployment insurance or other forms of governmental insurance or benefits and pursuant to letters of credit or other security arrangements entered into in connection with such insurance or benefit;

 

(g)                                     Indebtedness under the Five-Year Secured Letter of Credit Facility, Indebtedness under the Three-Year Unsecured Letter of Credit Facility, Indebtedness under the Citi Facility and Indebtedness under the IPC Facilities;

 

(h)                                     Indebtedness arising under any Syndicate Arrangement;

 

(i)                                         without duplication, additional Indebtedness of subsidiaries of the Original Guarantor not otherwise permitted under paragraphs (a) through (h), (j) or (k) of this definition which, when added to the aggregate amount of all Liens (other than with respect to Indebtedness incurred pursuant to this paragraph (i)) incurred by the Original Guarantor pursuant to sub-clause 23.14.26 of Clause 23.14 (Liens), shall not exceed at any time outstanding 5 per cent. of Consolidated Net Worth at the time of incurrence of any new Indebtedness under this paragraph (i); provided that immediately after giving effect (including pro forma effect) to the incurrence of any Indebtedness pursuant to this paragraph (i), no Event of Default shall have occurred and be continuing;

 

(j)                                         Indebtedness of Transatlantic or any subsidiary of Transatlantic existing on the date of the consummation of the Transatlantic Acquisition and extensions, renewals and replacements of any such Indebtedness; provided that such extending, renewal or replacement Indebtnedness (i) shall not be Indebtedness of an obligor that was not an obligor with respect to the Indebtedness being extended, renewed or replaced, (ii) shall not be in a principal amount that exceeds the principal amount of the Indebtedness being extended, renewed or replaced (plus any accrued but unpaid interest and redemption premium payable by the terms of such Indebtedness thereon and reasonable refinancing or renewal fees, costs and expenses) and (iii) shall not have an earlier maturity date or shorter weighted average life than the Indebtedness being extended, renewed or replaced;

 

(k)                                      upon provision of the Guarantee from Transatlantic described in Clause 23.26 (Transatlantic Guarantee), the Guarantee by Transatlantic of any Indebtedness of the Original Guarantor or any subsidiary of the Original Guarantor permitted to be incurred pursuant to Clause 23.15; and

 

(l)                                         Indebtedness created, incurred or assumed by any subsidiary of the Original Guarantor, the proceeds of which are used to consummate the Transatlantic Acquisition and extensions, renewals and replacements of any such 

 

19

 

Indebtedness; provided that such extending, renewal or replacement Indebtedness (i) shall not be Indebtedness of an obligor that was not an  obligor with respect to the Indebtedness being extended, renewed or replaced, (ii) shall not be in a principal amount that exceeds the principal amount of the Indebtedness being extended, renewed or replaced (plus any accrued but unpaid interest and redemption premium payable by the terms of such Indebtedness thereon and reasonable refinancing or renewal fees, costs and expenses) and (iii) shall not have an earlier maturity date or shorter weighted average life than the Indebtedness being extended, renewed or replaced.

 

“Plan” means any pension plan as defined in Section 3(2) of ERISA and subject to Title IV of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) the Original Guarantor or any of its ERISA Affiliates, and each such plan for the five year period immediately following the latest date on which the Original Guarantor or any of its ERISA Affiliates maintained, contributed to or had an obligation to contribute to such plan.

 

“Policies” means all insurance policies, annuity contracts, guaranteed interest contracts and funding agreements (including riders to any such policies or contracts, certificates issued with respect to group life insurance or annuity contracts and any contracts issued in connection with retirement plans or arrangements) and assumption certificates issued or to be issued (or filed pending current review by applicable Governmental Authorities) by any Regulated Insurance Company and any coinsurance agreements entered into or to be entered into by any Regulated Insurance Company.

 

“Preferred Securities” means any preferred Equity Interests (or capital stock) of any person that has preferential rights with respect to dividends or redemptions or upon liquidation or dissolution of such person over shares of common Equity Interests (or capital stock) of any other class of such person.

 

“Private Act” means separate legislation enacted in Bermuda with the intention that such legislation apply specifically to any Obligor, in whole or in part.

 

“Proportion” means, in relation to a Lender:

 

(a)                                      the proportion borne by its Commitment to the Total Commitments (or, if the Total Commitments are then zero, by its Commitment to the Total Commitments immediately prior to their reduction to zero); and

 

(b)                                     in respect of any Letter of Credit and save as otherwise provided herein, the proportion (expressed as a percentage) borne by such Lender’s Available Commitment to the Available Facility immediately prior to the issue of such Letter of Credit.

 

“Protected Cell Company” means any subsidiary of the Original Guarantor that has created segregated accounts pursuant to the provisions of the Segregated Account Companies Act 2000 of Bermuda.

 

“Quotation Date” means, in relation to any period for which an interest rate is to be determined hereunder:

 

20

 

(a)                                      (if the currency is domestic sterling) the first day of that period; or

 

(b)                                     (for any other currency) two Business Days before the first day of that period,

 

unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Date for that currency will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Date will be the last of those days).

 

“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.

 

“Reference Banks” means the principal London offices of ING Bank N.V., London Branch and Lloyds TSB Bank plc or such banks as may be appointed as such by the Agent after consultation with the Original Borrower.

 

“Regulated Insurance Company” means any subsidiary of the Original Guarantor, whether now owned or hereafter acquired, that is authorised or admitted to carry on or transact Insurance Business in any jurisdiction (foreign or domestic) and is regulated by any Applicable Insurance Regulatory Authority.

 

“Reinsurance Agreement” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“Release Test Calculations” has the meaning given to such term in Clause 21.9 (Release Test Calculations).

 

“Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.

 

“Relevant Interbank Market” means the London interbank market.

 

“Repeated Representations” means each of the representations set out in Clause 20.1 (Corporate Status) to Clause 20.3 (No Contravention of Agreements or Organisational Documents), Clause 20.9 (Tax Returns and Payments), Clause 20.15 (Insurance Licenses), Clause 20.17 (Properties; Liens; and Insurance) to Clause 20.18 (Solvency) and Clause 20.19 (No Default).

 

“Representations” means each of the representations set out in Clause 20 (Representations).

 

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

 

“Requested Increase” has the meaning given to such term in Clause 10.1.1.

 

“Required Proportion” has the meaning given to such term in Clause 10.3 (Notification 

 

21

 

of Commitment Increase Request).

 

“Retrocession Agreement” has the meaning given to such term in Clause 22.2 (Financial Definitions).

 

“S&P” means Standard & Poor’s Ratings Services, a division of McGraw Hill Companies, Inc.

 

“SAP” means, with respect to any Regulated Insurance Company, the statutory accounting principles and accounting procedures and practices prescribed or permitted by the Applicable Insurance Regulatory Authority of the state or jurisdiction in which such Regulated Insurance Company is domiciled.

 

“SEC” means the US Securities and Exchange Commission or any successor thereto.

 

“Secured Obligations” has the meaning set forth in the Security Agreement.

 

“Secured Parties” means the Security Trustee, any Receiver or Delegate, the Agent, each Lender and the Arranger from time to time party to this Agreement.

 

“Security Agreement” means the pledge and security agreement relating to the Collateral dated on or about the date hereof between the Custodian, the Special Report Agent, the Original Borrower, the Original Guarantor, the Grantors identified therein from time to time and the Security Trustee.

 

“Security Documents” means the Security Agreement, the Control Agreement and any other document designated in writing as such by the Original Borrower and the Security Trustee.

 

“Significant Subsidiary” means, at any time, each subsidiary of the Original Guarantor that, as of such time, meets the definition of a “significant subsidiary” under Regulation S-X of the SEC.

 

“Solvent” means, with respect to any person on a particular date, that on such date:

 

(a)                                      the fair value of its assets exceeds the amount of its liabilities (in each case, as would be reflected on a balance sheet prepared in accordance with GAAP); and

 

(b)                                     such person does not intend to incur debts beyond their ability to pay such debts as they mature (taking into account the timing and amounts of cash to be received by such person, and of amounts to be payable on or in respect of debt of such person).

 

“Special Report Agent” has the meaning set forth in the Security Agreement.

 

“Specified Amendments” means the amendments to this Agreement set forth in SCHEDULE 19 (Specified Amendments).

 

“Super-Majority Lenders” means, save as otherwise provided herein a Lender or Lenders whose Commitments amount (or, if each Lender’s Commitment has been reduced to zero, did immediately before such reduction to zero, amount) in aggregate to 66 2/3 per cent. or more of the Total Commitments provided that:

 

22

 

(a)                                      so long as a Lender is a Defaulting Lender, the Commitments of such Lender shall not be included in determining whether the Super-Majority Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Clause 38 (Amendments and Waivers)); and

 

(b)                                     any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender.

 

“Syndicate Arrangement” means an arrangement entered into by a managing agent at Lloyd’s on behalf of the Account Party together with the other syndicate members with respect to financing or reinsurance for the purposes of or in connection with the underwriting business carried on by all such members of that syndicate.

 

“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) imposed by any Governmental Authority.

 

“Term” means, save as otherwise provided herein, in relation to any Letter of Credit, the period from its Utilisation Date until its Expiry Date.

 

“Three-Year Unsecured Letter of Credit Facility” means the $200,000,000 three-year unsecured letter of credit facility dated 12 March 2007 between, Validus Holdings, Ltd., JPMorgan Chase Bank, National Association, as administrative agent and others, including the related instruments and agreements executed in connection therewith, and amendments, renewals, replacements, refinancings and restatements to any of the foregoing.

 

“Total Commitments” means, at any time, the aggregate of the Lenders’ Commitments, being $25,000,000 as at the date of this Agreement together with any increase in the Total Commitments effected in accordance with Clause 10 (Commitment Increase Request).

 

“Transaction Security” means the Liens created or expressed to be created in favour of the Security Trustee pursuant to the Security Documents.

 

“Transatlantic” means Transatlantic Holdings, Inc., a Delaware corporation.

 

“Transatlantic Acquisition” means the acquisition by the Original Guarantor of at least a majority of the outstanding shares of common stock of Transatlantic on a fully diluted basis, whether pursuant to privately-negotiated or open market purchases, tender offer, exchange offer, merger, consolidation, share swap or other transaction, including, without limitation, pursuant to (a)(i) the exchange offer commenced by the Original Guarantor on 25 July 2011 as it may be amended, supplemented or extended from time to time and (ii) a second-step merger of Transatlantic with a wholly-owned  subsidiary of the Original Guarantor pursuant to the General Corporation Law of the State of Delaware, as amended, pursuant to which the Original Guarantor will acquire all outstanding shares of Transatlantic common stock that are not acquired in the exchange offer described in clause (i) above, and/or (b) the terms of a definitive merger agreement or other business combination agreement between the Original Guarantor and 

 

23

 

Transatlantic.

 

“Transfer Certificate” means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Agent and the Original Borrower.

 

“Transfer Date” means, in relation to a transfer, the later of:

 

(a)                                      the proposed Transfer Date specified in the Transfer Certificate; and

 

(b)                                     the date specified by the Agent to the Existing Lender and the New Lender upon execution by the Agent of the Transfer Certificate.

 

“Transferee” means a person to which a Lender seeks to transfer by novation all or part of such Lender’s rights, benefits and obligations under the Finance Documents.

 

“UCC” means the Uniform Commercial Code, as amended, and as in effect from time to time in the State of New York, except that references to sections of the UCC refer to the section numbers of such sections as of the date of this Agreement.

 

“UK  GAAP” means generally accepted accounting principles in the United Kingdom.

 

“Unpaid Sum” means the unpaid balance of any of the sums referred to in Clause 18.1 (Default Interest Periods).

 

“US” means the United States of America.

 

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

 

“Utilisation Date” means, in relation to a Letter of Credit, the date on which it is to be issued.

 

“Utilisation Request” means a notice substantially in the form set out in Schedule 3 (Form of Utilisation Request).

 

“Validus Guarantee” means the guarantee and indemnity of each Guarantor set out in Clause 19 (Guarantee and Indemnity).

 

“Wholly-Owned Subsidiary” of any person means any subsidiary of such person to the extent all of the capital stock or other ownership interests in such subsidiary, other than directors’ or nominees’ qualifying shares, is owned directly or indirectly by such person.

 

1.2                           Interpretation

 

Any reference in this Agreement to:

 

	
1.2.1
    	
 
    	
the “Agent”, “Structuring  Agent”,   the “Arranger”, the “Security Trustee”, any “Finance Party”, any “Secured Party”, any “Lender”, any “Obligor” or any “Party”   shall be construed so as to include its successors in title, permitted   assigns and permitted transferees and, in the case of the Security Trustee,   any person for the time being appointed as Security Trustee or Security   Trustees in accordance with this Agreement;
    

 

24

 

	
1.2.2
    	
 
    	
a document in “agreed form” is a document which is   initialled by or on behalf of the Original Borrower and the Agent;
    

 

	
1.2.3
    	
 
    	
a default (other than an   Event of Default) is “continuing”   if it has not been remedied or waived and an Event of Default is “continuing” if it has not been remedied or waived;
    
	
 
    	
 
    	
 
    
	
1.2.4
    	
 
    	
the “equivalent”   on any date in one currency (the “first currency”)   of an amount denominated in another currency (the “second   currency”) is a reference to the amount of the first currency which   could be purchased with the amount of the second currency at the Agent’s Spot   Rate of Exchange on such date for the purchase of the first currency with the   second currency;
    
	
 
    	
 
    	
 
    
	
1.2.5
    	
 
    	
a “holding   company” of a company or corporation shall be construed as a   reference to any company or corporation of which the first-mentioned company   or corporation is a subsidiary;
    
	
 
    	
 
    	
 
    
	
1.2.6
    	
 
    	
a “member”   shall be construed (when the context so requires) as a reference to an   underwriting member of Lloyd’s;
    
	
 
    	
 
    	
 
    
	
1.2.7
    	
 
    	
a “month”   is a reference to a period starting on one day in a calendar month and ending   on the numerically corresponding day in the next succeeding calendar month   save that, where any such period would otherwise end on a day which is not a   Business Day, it shall end on the next succeeding Business Day, unless that   day falls in the calendar month succeeding that in which it would otherwise   have ended, in which case it shall end on the immediately preceding Business   Day, provided that, if a period starts on   the last Business Day in a calendar month or if there is no numerically   corresponding day in the month in which that period ends, that period shall   end on the last Business Day in that later month (and references to “months” shall be construed accordingly);
    
	
 
    	
 
    	
 
    
	
1.2.8
    	
 
    	
a Lender’s “participation”, in relation to a Letter of Credit, shall   be construed as a reference to the rights and obligations of such Lender in   relation to such Letter of Credit as are expressly set out in this Agreement;
    
	
 
    	
 
    	
 
    
	
1.2.9
    	
 
    	
a “person”   shall be construed as a reference to any natural person, firm, company, corporation, limited   liability company, trust, joint venture, government, state or agency of a state (including any Governmental  Authority), any association or partnership (whether   or not having separate legal personality) of two or more of the foregoing or any other   entity;
    
	
 
    	
 
    	
 
    
	
1.2.10
    	
 
    	
“subsidiary” means, with respect to any person (the “parent”) at any date, any corporation, limited liability   company, partnership, association or other entity the accounts of which would   be consolidated with those of the parent in the parent’s consolidated   financial statements if such financial statements were prepared in accordance   with GAAP as of such date, as well as any other corporation, limited liability   company, partnership, association or other entity of which securities or   other ownership interests representing more than 50% of the equity or   ordinary voting power or, in the case of a partnership, more than 50%
    

 

 

25

 

	
 
    	
 
    	
of the general partnership   interests are, as of such date, owned, controlled or held by the parent or   one or more subsidiaries of the parent or by the parent and one or more   subsidiaries of the parent provided that neither   1384 Capital Limited nor the Talbot Employee Benefit Trust shall be a   subsidiary of any parent for the purposes of this Agreement;
    
	
 
    	
 
    	
 
    
	
1.2.11
    	
 
    	
a “successor”   shall be construed so as to include an assignee or successor in title of such   party and any person who under the laws of its jurisdiction of incorporation   or domicile has assumed the rights and obligations of such party under this   Agreement or to which, under such laws, such rights and obligations have been   transferred;
    
	
 
    	
 
    	
 
    
	
1.2.12
    	
 
    	
“VAT”   shall be construed as a reference to value added tax including any similar   tax which may be imposed in place thereof from time to time; and
    
	
 
    	
 
    	
 
    
	
1.2.13
    	
 
    	
the “winding-up”,   “dissolution” or “administration”   of a company or corporation shall be construed so as to include any equivalent   or analogous proceedings under the law of the jurisdiction in which such   company or corporation is incorporated or any jurisdiction in which such   company or corporation carries on business including the seeking of   liquidation, winding-up, reorganisation, dissolution, administration,   arrangement, adjustment, protection or relief of debtors.
    

 

1.3                           Syndicate

 

For the purpose of construing references in this Agreement to a Lloyd’s syndicate, unless the context otherwise requires, the several groups of members to which in successive years a particular syndicate number is assigned by the Council of Lloyd’s shall be treated as the same syndicate notwithstanding that they may not comprise the same members with the same premium income limits.

 

1.4                           Currency Symbols

 

“£” and “sterling” denote lawful currency of the United Kingdom for the time being and “dollars” and “$” denote lawful currency of the US for the time being.

 

1.5                           Agreements and Statutes

 

Any reference in this Agreement to:

 

	
1.5.1
    	
 
    	
this Agreement or any   other agreement or document shall be construed as a reference to this   Agreement or, as the case may be, such other agreement or document as the   same may have been, or may from time to time be, amended, restated, varied,   novated or supplemented;
    
	
 
    	
 
    	
 
    
	
1.5.2
    	
 
    	
a statute or treaty shall   be construed, unless the context otherwise requires, as a reference to such   statute or treaty as the same may have been, or may from time to time be,   amended or, in the case of a statute, re-enacted; and
    
	
 
    	
 
    	
 
    
	
1.5.3
    	
 
    	
a byelaw shall be   construed as a reference to a byelaw made under Lloyd’s Acts 1871 to 1982 as   the same may have been, or may from time to time be, amended or replaced.
    

 

26

 

 

1.6                           Headings

 

Clause and Schedule headings are for ease of reference only.

 

1.7                           Time

 

Any reference in this Agreement to a time of day shall, unless a contrary indication appears, be a reference to London time.

 

1.8                           Third Party Rights

 

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

 

27

 

SECTION 2
 THE FACILITY

 

2.                                 THE FACILITY

 

2.1                           Grant of the Facility

 

The Lenders, upon the terms and subject to the conditions hereof, grant to the Borrowers on behalf of the Account Party, a multicurrency letter of credit facility in an aggregate amount equal to the Total Commitments.

 

2.2                           Purpose and Application

 

The Facility is intended to enable the Account Party to provide Funds at Lloyd’s for the 2012, 2013 and prior open underwriting years of account of the Managed Syndicate, it being acknowledged that for so long as the Letters of Credit issued hereunder are deposited at Lloyd’s, they shall be deemed to support all of the Account Party’s underwriting years of account that have yet to close, and accordingly, the Borrowers shall apply all amounts raised by it hereunder in or towards satisfaction of such purposes and none of the Finance Parties shall be obliged to concern themselves with such application.

 

2.3                           Ranking of Funds at Lloyd’s

 

It is acknowledged by the parties hereto that, subject to the duties of Lloyd’s as trustee of all Funds at Lloyd’s and to any conditions and requirements prescribed under the Membership Byelaw (No. 5 of 2005) which are for the time being applicable, the Facility will provide Funds at Lloyd’s for the Account Party which, to the extent that such parties are able to procure the same upon and subject to the terms of this Agreement, shall only be applied after all of the Own FAL of the Account Party from time to time has been exhausted.

 

2.4                           Application of Own FAL

 

The Borrowers shall use all reasonable endeavours to ensure that the Own FAL at Lloyd’s of the Account Party are applied to the fullest extent possible before any payment is made under a Letter of Credit in respect of the Account Party (including, without limitation, using all reasonable endeavours to obtain a Letter of Comfort with respect to the order of application of Funds at Lloyd’s).

 

2.5                           Initial Conditions Precedent

 

Save as the Lenders may otherwise agree, the Borrowers may not deliver a Utilisation Request unless the Agent has confirmed to the Borrowers on the Closing Date by means of executing this Agreement that it has received all of the documents and other evidence listed in Schedule 2 (Conditions Precedent) and that each is, in form and substance, satisfactory to the Agent.

 

2.6                           Further conditions precedent

 

The Lenders will only be obliged to comply with Clause 3.4 (Each Lender’s participation in Letters of Credit), if on the date of the Utilisation Request and on the proposed Utilisation Date:

 

2.6.1                            no Default is continuing or would result from the issue of the proposed Letter of Credit; and

 

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2.6.2                            the Repeated Representations are true in all material respects with the same effect as though such Repeated Representations had been made on the date of the Utilisation Request and on the Utilisation Date (it being understood and agreed that any Repeated Representation which by its terms is made as of a specified date shall be required to be true in all material respects only as of such specified date).

 

2.7                           Several Obligations

 

The obligations of each Lender are several and the failure by a Lender to perform its obligations hereunder shall not affect the obligations of an Obligor towards any other party hereto nor shall any other party be liable for the failure by such Lender to perform its obligations hereunder.

 

2.8                           Several Rights

 

The rights of each Finance Party are several and any debt arising hereunder at any time from an Obligor to any Finance Party shall be a separate and independent debt.  Except as otherwise stated in the Finance Documents each such party shall be entitled to protect and enforce its individual rights arising out of this Agreement independently of any other party (so that it shall not be necessary for any party hereto to be joined as an additional party in any proceedings for this purpose).

 

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SECTION 3
 UTILISATION

 

3.                                 UTILISATION OF THE FACILITY

 

3.1                           Utilisation Conditions for the Facility

 

Save as otherwise provided herein, a Letter of Credit will be issued at the request of a Borrower if:

 

3.1.1                            no less than three Business Days before the proposed Utilisation Date, the Agent has received a completed Utilisation Request from such Borrower;

 

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

 

3.1.3                            the first day of the Term of the Letter of Credit is a Business Day falling within the Availability Period;

 

3.1.4                            the proposed Expiry Date of the Letter of Credit shall be:

 

(a)                     in the case of any Letter of Credit providing Funds at Lloyd’s for the 2012 and prior open underwriting years of account of the Managed Syndicate only, 31 December 2015; and

 

(b)                    in the case of any Letter of Credit providing Funds at Lloyd’s for the 2013 and prior open underwriting years of account of the Managed Syndicate only, 31 December 2016;

 

3.1.5                            the Letter of Credit is substantially in the form set out in Schedule 6 (Form of Letter of Credit);

 

3.1.6                            the beneficiary of such Letter of Credit is Lloyd’s; and

 

3.1.7                            the conditions set out in Clause 3.2 (Currency and amount) are satisfied,

 

provided that no Letter of Credit shall be issued for the account of the Account Party at any time when the Outstandings exceed (or would after the issuance of such Letter of Credit exceed) the Borrowing Base of the Account Party at such time.

 

3.2                           Currency and amount

 

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

 

3.2.2                            The amount of the proposed Letter of Credit must be:

 

(a)                     if the currency selected is the Base Currency, a minimum of $1,000,000 or if less, the  Available Facility; or

 

(b)                    if the currency selected is the Optional Currency, a minimum of £500,000 or if less, the Available Facility; and

 

(c)                     in any event such that its Base Currency Amount is less than or equal to the Available Facility.

 

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3.3                           Completion of Letters of Credit

 

The Agent is authorised to issue each Letter of Credit pursuant to Clause 3.1 (Utilisation Conditions for the Facility) by:

 

3.3.1                            completing the issue date, the proposed Expiry Date and the other details required in respect of such Letter of Credit, in accordance with the Utilisation Request for such Letter of Credit;

 

3.3.2                            completing the schedule to such Letter of Credit with the percentage participation of each Lender as allocated pursuant to the terms hereof; and

 

3.3.3                            executing such Letter of Credit on behalf of each Lender and following such execution delivering such Letter of Credit together with a Credit Institution Confirmation with respect to each Lender to Lloyd’s on the Utilisation Date,

 

and, promptly after each such Letter of Credit is delivered to Lloyd’s, the Agent shall send a copy of it to the Borrower that requested such Letter of Credit.

 

3.4                           Each Lender’s Participation in Letters of Credit

 

Save as otherwise provided herein, each Lender will participate in each Letter of Credit issued pursuant to this Clause 3 in the proportion borne by its Available Commitment to the Available Facility immediately prior to the issue of such Letter of Credit.

 

3.5                           Lloyd’s Approved Credit Institution

 

3.5.1                            Each Lender acknowledges that the Agent must provide a Credit Institution Confirmation to Lloyd’s with each Letter of Credit.

 

3.5.2                            For the purposes of the Agent providing such Credit Institution Confirmation to Lloyd’s, each Lender confirms, on the date of this Agreement and on the date of issue of any Letter of Credit, that, subject to compliance with the terms of this Agreement for the utilisation of a Letter of Credit:

 

(a)                     it hereby authorises the execution and delivery by the Agent of each Letter of Credit and each such Letter of Credit will be duly executed by the Agent on its behalf; and

 

(b)                    its obligations under any Letter of Credit constitute its legal, valid and binding obligations.

 

3.5.3                            In the event that any Lender participating in the Facility ceases to be an Approved Credit Institution, following notification by Lloyd’s to an Obligor, that Obligor shall notify the Arrangers thereof and the Arrangers, in consultation with the Original Borrower, will, subject to agreement relating to fees and expenses, use their reasonable endeavours to replace the participation of such Lender in the Facility and in any Letter of Credit issued hereunder with one or more of the other Lenders or with another Approved Credit Institution. In the event that any such Lender ceases to be so accredited it shall, at the request of the Agent, transfer (in accordance with Clause 25 (Changes to the Lenders)) its Commitment and participation in outstanding Letters of Credit to such financial institution which is accredited by Lloyd’s and which has been

 

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agreed by the Arrangers and the Original Borrower.  The Original Borrower agrees to reimburse the Agent and the Arrangers for all fees, costs and expenses (including legal fees) together with any VAT thereon incurred in connection with such replacement of a Lender’s participation.

 

3.5.4                            In the event that any Lender participating in the Facility is a Defaulting Lender, following a request by the Original Borrower, (i) the Agent, at the request of and in consultation with the Original Borrower, shall, subject to reaching prior agreement with the Original Borrower in relation to fees and expenses, use reasonable endeavours to replace the participation of such Lender in the Facility and in any Letter of Credit issued hereunder with one or more of the other Lenders (if any other such Lender is willing to accept all or part of such participation) or with another financial institution  that is an Approved Credit Institution and (ii) such Lender shall (in accordance with the provisions of Clause 24 (Changes to the Lenders)) transfer its Commitment and participation in outstanding Letters of Credit to such financial institution which has been agreed between the Agent and the Original Borrower. The Original Borrower agrees to reimburse the Finance Parties for all fees, costs and expenses (including legal fees) together with any VAT thereon incurred in connection with such replacement of a Lender’s participation.

 

3.6                           Expiry of Availability Period

 

The Available Commitment of each Lender shall be reduced to zero at the end of the Availability Period.

 

3.7                           Notice of Non-Extension in respect of Letters of Credit

 

3.7.1                            The Agent shall, no earlier than:

 

(a)                     in the case of any Letter of Credit providing Funds at Lloyd’s for the 2012 and prior open underwriting years of account of the Managed Syndicate only, 1 December 2011 and no later than 31 December 2011, give a Notice of Non-Extension to Lloyd’s in respect of such Letter of Credit issued hereunder (and the Lenders hereby authorise the Agent to serve such notice) so that each such Letter of Credit expires at any time after 31 December 2015; or

 

(b)                    in the case of any Letter of Credit providing Funds at Lloyd’s for the 2013 and prior open underwriting years of account of the Managed Syndicate only, 1 December 2012 and no later than 31 December 2012, give a Notice of Non-Extension to Lloyd’s in respect of such Letter of Credit issued hereunder (and the Lenders hereby authorise the Agent to serve such notice) so that each such Letter of Credit expires at any time after 31 December 2016.

 

3.7.2                            In the event that any Letter of Credit is issued after a Notice of Non-Extension has been given under sub-clause 3.7.1 above the Agent shall give a Notice of Non-Extension in respect of such Letter of Credit at the time such Letter of Credit is issued.

 

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3.7.3                            Upon the expiry of a Letter of Credit in accordance with a Notice of Non-Extension, the maximum actual and contingent liabilities of each Lender under the Letter of Credit referred to in such Notice of Non-Extension will be reduced to zero.

 

3.8                           Applied Letters of Credit

 

If, notwithstanding the provisions of Clause 2.4 (Application of  Own FAL), any sum is paid under a Letter of Credit (an “Applied Letter of Credit”) which is greater than any sum which would have been paid had Own FAL been applied to meet any demand prior to the Funds at Lloyd’s provided pursuant to this Facility in accordance with Clause 2.4 (Application of Own FAL) (the difference between the sum paid under the Applied Letter of Credit and the sum which should have been paid being the “Overpayment”), each Borrower shall, to any extent necessary to facilitate the indemnification of the Lenders under Clause 7 (Borrower’s Indemnity to the Lenders), use all reasonable endeavours to procure the release by Lloyd’s of the Own FAL of the Account Party in an amount equal to the Overpayment and, upon the Lenders being indemnified in full thereunder (but subject to the Agent receiving confirmation in writing from the Original Borrower that no Default is continuing), either:

 

3.8.1                            a supplementary Letter of Credit will be issued in an amount equal to the Overpayment having an Expiry Date which is the same as that of the Applied Letter of Credit; or

 

3.8.2                            the Applied Letter of Credit will be amended by increasing the amount thereof by an amount equal to the Overpayment.

 

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SECTION 4
 COSTS OF UTILISATION

 

4.                                 LETTER OF CREDIT COMMISSION

 

4.1                           Letter of Credit Commission

 

Each Borrower shall, in respect of each Letter of Credit requested by it, pay to the Agent for the account of each Lender (for distribution in proportion to each Lender’s Proportion of such Letter of Credit) a letter of credit commission in the currency in which the relevant Letter of Credit is denominated, at the relevant L/C Commission Rate on the aggregate Commitments of the Lenders under such Letter of Credit.  Such letter of credit commission shall be calculated on a daily basis according to the Commitments on each such day, and shall be paid in arrear in respect of each successive period of three months (or such shorter period as shall end on the relevant Expiry Date) during the Term of the relevant Letter of Credit, the first such payment to be made on the date falling three Months after the Utilisation Date for such Letter of Credit and successive payments to be made thereafter on the last day of each successive such period (each an “Interest Payment Date”).

 

4.2                           Defaulting Lenders

 

Notwithstanding anything to the contrary in this Clause 4, for so long as a Lender is a Defaulting Lender, no letter of credit commission hereunder shall accrue or be payable to such Lender until such Lender ceases to be a Defaulting Lender.

 

5.                                 MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES

 

5.1                           Absence of quotations

 

Subject to Clause 5.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11.00 am on the Quotation Date, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

 

5.2                           Market Disruption

 

If, in relation to any Unpaid Sum:

 

5.2.1                            LIBOR is to be determined by reference to Reference Banks and at or about 11.00 a.m. on the Quotation Date for the relevant Interest Period none or only one of the Reference Banks supplies a rate for the purpose of determining LIBOR for the relevant Interest Period; or

 

5.2.2                            before the close of business in London on the Quotation Date for such Unpaid Sum the Agent has been notified by a Lender or each of a group of Lenders to whom in aggregate fifty per cent. or more of such Unpaid Sum is owed that the LIBOR rate does not accurately reflect the cost of funding its participation in such Unpaid Sum,

 

then, the Agent shall notify the relevant Borrower and the Lenders of such event and, notwithstanding anything to the contrary in this Agreement, Clause 5.3 (Substitute Interest Period and Interest Rate) shall apply to such Unpaid Sum.

 

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5.3                           Substitute Interest Period and Interest Rate

 

If either sub-clause 5.2.1 or 5.2.2 of Clause 5.2 (Market Disruption) applies to an Unpaid Sum, the rate of interest applicable to each Lender’s portion of such Unpaid Sum during the relevant Interest Period shall (subject to any agreement reached pursuant to Clause 5.4 (Alternative basis of interest or funding)) be the rate per annum which is the sum of:

 

5.3.1                            the Mandatory Costs Rate, if any, applicable to that Lender’s portion of such Unpaid Sum; and

 

5.3.2                            the rate per annum notified to the Agent by such Lender before the last day of such Interest Period to be that which expresses as a percentage rate per annum the cost to such Lender of funding from whatever sources it may reasonably select its portion of such Unpaid Sum during such Interest Period.

 

5.4                           Alternative basis of interest or funding

 

5.4.1                            If either of those events mentioned in sub-clauses 5.2.1 and 5.2.2 of Clause 5.2 (Market Disruption) occurs in relation to an Unpaid Sum and the Agent or the Original Borrower so requires, the Agent and the Original Borrower shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing on a substitute basis for determining the rate of interest.

 

5.4.2                            Any alternative basis agreed pursuant to sub-clause 5.4.1 above shall, with the prior consent of all the Lenders and the Original Borrower, be binding on all Parties.

 

5.5                           Interest Rate Determination

 

The Agent shall promptly notify the relevant Borrower and the Lenders of each determination of LIBOR and the Mandatory Costs Rate.

 

5.6                           Changes to Interest Rates

 

The Agent shall promptly notify the relevant Borrower and the Lenders of any change to:

 

5.6.1                            the proposed length of an Interest Period; or

 

5.6.2                            any interest rate occasioned by the operation of Clause 4.2 (Market Disruption and Alternative Interest Rates).

 

6.                                 NOTIFICATION

 

6.1                           Letters of Credit

 

Not less than one Business Day before the first day of a Term, the Agent shall notify each Lender, in respect of each Letter of Credit to be issued, of:

 

6.1.1                            the proposed length of the relevant Term;

 

6.1.2                            the proposed currency;

 

6.1.3                            the aggregate principal amount; and

 

6.1.4                            the Utilisation Date.

 

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6.2                           Demands under Letters of Credit

 

If a demand is made under a Letter of Credit the Agent shall promptly make demand upon the relevant Borrower in accordance with this Agreement and notify the Lenders.

 

7.                                 BORROWER’S INDEMNITY TO THE LENDERS

 

7.1                           Borrowers’ Indemnity to Lenders

 

Without duplication of any expense reimbursement obligations or indemnities contained elsewhere in this Agreement or the other Finance Documents, each Borrower shall irrevocably and unconditionally as a primary obligation indemnify (within 5 Business Days of demand by the Agent) each Finance Party against:

 

7.1.1                            any sum paid or due and payable by such Finance Party under any Letter of Credit requested by it; and

 

7.1.2                            all liabilities, costs (including, without limitation, any costs incurred in funding any amount which falls due from such Lender in connection with such Letter of Credit), claims, losses and expenses which such Finance Party may at any time reasonably incur or sustain in connection with any Letter of Credit (in each case, invoiced in reasonable detail),

 

provided that such indemnity shall not, as to any Finance Party, be available to the extent that such liabilities, costs, claims, losses, damages or related expenses have resulted from the gross negligence or wilful misconduct of any Finance Party.

 

Each Borrower waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to enforce the Transaction Security before claiming from such Borrower under this Clause 7.  This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

 

7.2                           Preservation of Rights

 

Neither the obligations of any Borrower set out in this Clause 7 nor the rights, powers and remedies conferred on any Lender by this Agreement or by law shall be discharged, impaired or otherwise affected by:

 

7.2.1                            the winding-up, dissolution, administration or re-organisation of any Lender or any other person or any change in its status, function, control or ownership;

 

7.2.2                            any of the obligations of any Lender or any other person hereunder or under any Letter of Credit or under any other security taken in respect of any Borrower’s obligations hereunder or otherwise in connection with a Letter of Credit being or becoming illegal, invalid, unenforceable or ineffective in any respect;

 

7.2.3                            time or other indulgence being granted or agreed to be granted to any Lender or any other person in respect of its obligations hereunder or under or in connection with a Letter of Credit or under any such other security;

 

7.2.4                            any amendment to, or any variation, waiver or release of, any obligation of any Lender or any other person under a Letter of Credit or this Agreement;

 

7.2.5                            any other act, event or omission which, but for this Clause 7, might operate to

 

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discharge, impair or otherwise affect any of the obligations of the relevant Borrower set out in this Clause 7 or any of the rights, powers or remedies conferred upon any Lender by this Agreement or by law.

 

The obligations of each Borrower set out in this Clause 7 shall be in addition to and independent of every other security which any Lender may at any time hold in respect of such Borrower’s obligations hereunder.

 

7.3                           Settlement Conditional

 

Any settlement or discharge between a Borrower and a Lender shall be conditional upon no security or payment to such Lender by a Borrower, or any other person on behalf of a Borrower, being avoided or reduced by virtue of any laws relating to bankruptcy, insolvency, liquidation or similar laws of general application and, if any such security or payment is so avoided or reduced, such Lender shall be entitled to recover the value or amount of such security or payment from that Borrower subsequently as if such settlement or discharge had not occurred.

 

7.4                           Right to make Payments under Letters of Credit

 

Each Lender shall be entitled to make any payment in accordance with the terms of the relevant Letter of Credit without any reference to or further authority from the relevant Borrower or any other investigation or enquiry.  Each Borrower irrevocably authorises each Lender to comply with any demand under a Letter of Credit which is valid on its face.

 

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SECTION 5
 PREPAYMENT, CANCELLATION AND COLLATERALISATION

 

8.                                 PREPAYMENT AND CANCELLATION

 

8.1                           Automatic Cancellation of the Facility

 

At close of business in London on the last Business Day of the Availability Period the Available Commitment of each Lender shall be (if it has not already been) reduced to zero.

 

8.2                           Cancellation of the Facility

 

The Original Borrower may, by giving to the Agent not less than five Business Days’ prior notice to that effect, cancel the whole or any part of the Available Facility (being a minimum amount of $1,000,000 and integral multiples of $500,000 thereafter). Any such cancellation shall reduce the Available Commitment and Commitment of each Lender rateably.

 

8.3                           Notice of Cancellation

 

Any notice of cancellation given by the Original Borrower pursuant to this Clause 8 shall be irrevocable and shall specify the date upon which such cancellation is to be made and the amount of such cancellation provided that any such notice may state that it is conditional upon the effectiveness of replacement financing, in which case such notice may be revoked by the Original Borrower by notice to the Agent, on or prior to the date specified in such notice as the anticipated effective date of replacement financing, if such condition is not satisfied.

 

8.4                           Notice of Removal of a Lender

 

If:

 

8.4.1                            any sum payable to any Lender by an Obligor  is required to be increased pursuant to Clause 11 (Tax Gross-up and Indemnities);

 

8.4.2                            any Lender claims indemnification from the Original Borrower under Clause 11.3 (Tax Indemnity) or Clause 12 (Increased Costs),

 

the Original Borrower may, whilst such circumstance continues, give the Agent at least ten Business Days’ notice (which notice shall be irrevocable) of its intention to cancel the Commitment of such Lender.

 

8.5                           Removal of a Lender

 

On the day the notice referred to in Clause 8.4 (Notice of Removal of a Lender) expires each Borrower at whose request a Letter of Credit has been issued shall procure that such Lender’s Proportion of each relevant Letter of Credit be reduced to zero (by reduction of the amount of such Letter of Credit in an amount equal to such Lender’s Proportion).

 

8.6                           No Further Availability

 

A Lender whose Commitment is to be cancelled under Clause 8.4 (Notice of Removal of a Lender) shall not be obliged to participate in any Letter of Credit on or after the date upon which the Agent receives the Original Borrower’s notice of its intention to cancel such Commitment, and such Lender’s Available Commitment shall be reduced to zero.

 

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8.7                           No Other Cancellation

 

No Borrower shall cancel all or any part of the Total Commitments except at the times and in the manner expressly provided for in this Agreement.

 

8.8                           No Reinstatement

 

No amount of the Total Commitments cancelled under this Agreement shall be reinstated.

 

9.                                 COLLATERALISATION OF LETTERS OF CREDIT

 

9.1                           Letters of Credit

 

9.1.1                            Without prejudice to the remainder of this Clause 9, the Borrowers shall ensure that at all times, the Borrowing Base is equal to or greater than the Outstandings.

 

9.1.2                            If at any time the Outstandings exceed the Borrowing Base, then the Obligors shall, within three Business Days of the earlier of any Obligor becoming aware of such shortfall or such shortfall being notified by the Agent to any Obligor, pay or deliver to the Custodian an amount of Cash or Eligible Securities (valued for this purpose based on the respective Advance Rate applicable thereto) as is necessary to satisfy the foregoing.

 

9.1.3                            Failure by the Obligors to comply with their obligations under sub-clause 9.1.2 within ten (10) Business Days of the earlier of any Obligor becoming aware or receiving notice that the Outstandings exceed the Borrowing Base shall constitute an immediate and automatic Event of Default under the terms and conditions of this Agreement.

 

9.1.4                            Notwithstanding the frequency of the reporting obligations set forth in Clause 21.8 (Borrowing Base Certificate), this covenant shall apply at all times and shall be tested by reference to the Borrowing Base Certificate most recently supplied in accordance with that Clause.

 

10.                           COMMITMENT INCREASE REQUEST

 

10.1                     Commitment Increase Request

 

10.1.1                      The Original Borrower may, on one occasion only and by written notice served on the Agent (such notice being, a “Commitment Increase Request”), indicate that it wishes to increase the Total Commitments (a “Requested Increase”) by an amount of no less than $2,000,000 and thereafter in integral multiples of $500,000 up to a maximum of US$7,500,000.

 

10.1.2                      Such Commitment Increase Request shall be binding on each of the Obligors and delivered to the Agent no later than the date falling 12 months after the date of the Amendment Agreement.

 

10.2                     Commitment Increase Fee

 

A fee shall be payable on the Increase Date by the Original Borrower to the Agent (the “Commitment Increase Fee”) which shall be distributed to those Lenders which agree to the increase and those Additional Lenders that agree to provide a Commitment, in

 

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accordance with Clauses 10.5 (Approval of Commitment Increase Request) or 10.6 (Partial approval of Commitment Increase Request). The amount of the Commitment Increase Fee shall be agreed between the Original Borrower and the Agent prior to the Commitment Increase Request being submitted to the Agent by the Original Borrower.

 

10.3                     Notification of Commitment Increase Request

 

The Agent shall request that each Lender notify the Agent, within 15 Business Days of receipt by the Agent of such Commitment Increase Request, whether it is prepared to assume an increase in its Commitment in an amount equal to the proportion of the Requested Increase as is borne by the aggregate amount of its Commitment to the Total Commitments immediately prior to the date of the Commitment Increase Request (the “Required Proportion”).

 

10.4                     Decline of Commitment Increase Request

 

To the extent any Lender declines (and for this purpose a Lender shall be treated as having declined if it has not responded to the Agent in the positive within the period of 15 Business Days referred to in Clause 10.3 (Notification of Commitment Increase Request) above) to assume an increase in its Commitment equal to the Required Proportion (the “Declined Amount”), the Agent shall promptly notify the Original Borrower in writing. Within 10 Business Days of receiving any such notification, the Original Borrower may by written notice served on the Agent nominate a bank or financial institution which is an Approved Credit Institution (an “Additional Lender”) to assume a Commitment in an amount of up to the Declined Amount.  Such written notice shall also be signed by such Additional Lender and shall confirm that the relevant Additional Lender has agreed to assume a Commitment in an amount of up to the Declined Amount.

 

10.5                     Approval of Commitment Increase Request

 

Immediately upon the Agent receiving notifications from the Lenders or Additional Lenders confirming that the full amount of the Requested Increase can be accommodated, it shall notify the Original Borrower in writing and with effect from the Increase Date:

 

10.5.1                      the Commitment of each relevant Lender shall be increased by an amount equal to the portion of the Requested Increase it has indicated it is prepared to assume; and

 

10.5.2                       in respect of an Additional Lender which is not a Lender, a Commitment shall be established for such amount, provided that such Additional Lender has acceded to this Agreement as a Lender in accordance with the terms of Clause 25.7 (Additional Lenders),

 

whereupon the Original Borrower shall pay the Commitment Increase Fee to the Agent. Upon receipt of such Commitment Increase Fee, the Agent shall promptly distribute this amount to those Lenders which agreed to the increase and those Additional Lenders that agree to provide a Commitment, in the proportion that the amount of the proposed increase in each such Lender’s or Additional Lender’s Commitments bears to the aggregate amount of the proposed increase in the Total Commitments.

 

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10.6                     Partial approval of Commitment Increase Request

 

In the event that notifications from Lenders and/or Additional Lenders who are willing to assume, as appropriate, an increase in their Commitment or a new Commitment (“Accepting Parties”) confirm that only part of the Requested Increase can be made available then either:

 

10.6.1                      the Original Borrower and the Accepting Parties shall be entitled, by notice to the Agent no later than 30 Business Days following receipt by the Agent of the relevant  Commitment Increase Request, to accept an increase in Commitment in such lower amount, whereupon with effect from the Increase Date:

 

(a)                     the Commitment of each relevant Lender shall be increased by an amount equal to the portion of the Requested Increase it has indicated it is prepared to assume; and

 

(b)                    in respect of an Additional Lender which is not a Lender, a Commitment shall be established for such amount of the Requested Increase it has indicated it is prepared to assume, provided that such Additional Lender has first acceded to this Agreement as a Lender in accordance with the terms of Clause 25.7 (Additional Lenders),

 

whereupon the Original Borrower shall pay the Commitment Increase Fee to the Agent. Upon receipt of such Commitment Increase Fee, the Agent shall promptly distribute this amount to those Lenders which agreed to the increase (or part thereof) and those Additional Lenders that agree to provide a Commitment, in the proportion that the amount of the proposed increase in each such Lender’s or Additional Lender’s Commitments bears to the aggregate amount of the proposed increase in the Total Commitments; or

 

10.6.2                      the Original Borrower shall be entitled, by notice to the Agent no later than 30 Business Days following receipt by the Agent of the relevant  Commitment Increase Request, to cancel the Commitment Increase Request (without incurring any cost, premium or penalty).

 

10.7                     Increase Date

 

For the purposes of this Clause 10, “Increase Date” means:

 

10.7.1                      the date on which the Agent confirms to the Original Borrower and the Lenders that the Agent, having contacted Lloyd’s to advise that a re-apportionment of commitments will be required in respect of a Letter of Credit and requesting the return of the relevant Letter of Credit (the “Existing Letter of Credit”), is satisfied that arrangements are in place with Lloyd’s for the exchange of the Existing Letter of Credit for a new Letter of Credit (the “New Letter of Credit”) detailing the liability of each issuing lender thereunder and otherwise being:

 

(a)                     for the same amount of the Existing Letter of Credit (in the case of Clause 10.5 (Approval of Commitment Increase Request) above) or for a lesser amount (in the case of Clause 10.6 (Partial approval of Commitment 

 

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Increase Request) above); and

 

(b)                    otherwise on the same terms as the Existing Letter of Credit for the remainder of the Term of such Existing Letter of Credit,

 

such that upon the Increase Date, each Lender’s (including each Additional Lender’s) participation in any Letters of Credit issued hereunder shall be equal to the proportion of that Lender’s Commitments to the Total Commitments; or

 

10.7.2                      if, in connection with any Requested Increase, the Agent determines that no re-apportionment of commitments is required in respect of any Letter of Credit, the date falling 5 Business Days after the date on which the Agent notifies the Original Borrower in writing that it has received the relevant acceptances of the Requested Increase from the Lenders.

 

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SECTION 6
 ADDITIONAL PAYMENT OBLIGATIONS

 

11.                           TAX GROSS UP AND INDEMNITIES

 

11.1                     Definitions

 

11.1.1                      In this Agreement:

 

“Foreign Lender” means any Lender which is treated by the jurisdiction in which a Borrower is resident for tax purposes:

 

(a)                     as being resident for tax purposes; or

 

(b)                    as having a place of business, place of management or permanent establishment,

 

in a jurisdiction other than that in which that Borrower is resident.

 

“Protected Party” means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of tax in relation to a sum received or receivable (or any sum deemed for the purposes of tax to be received or receivable) under a Finance Document.

 

“Tax Credit” means a credit against, relief from or remission or repayment of, any Tax.

 

“Tax Deduction” means a deduction or withholding for or on account of tax from a payment under a Finance Document.

 

“Tax Payment” means either the increase in a payment made by an Obligor to a Finance Party under Clause 11.2 (Tax gross-up) or a payment under Clause 11.3 (Tax indemnity).

 

11.1.2                      Unless a contrary indication appears, in this Clause 11 a reference to “determines” or “determined” means a determination made in the discretion (reasonably exercised) of the person making the determination.

 

11.2                     Tax gross-up

 

11.2.1                      Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

 

11.2.2                      The Original Borrower shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly.  Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender.  If the Agent receives such notification from a Lender it shall notify the Original Borrower and the relevant Obligor.

 

11.2.3                      If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

 

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11.2.4                      If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

 

11.2.5                      Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

 

11.3                     Tax indemnity

 

11.3.1                      The Original Borrower shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of tax by that Protected Party in respect of payments received or receivable by the Protected Party under a Finance Document or the transactions occurring under such Finance Document.

 

11.3.2                      Sub-clause 11.3.1 above shall not apply:

 

(a)                    with respect to any tax assessed on a Finance Party:

 

(i)                       under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or

 

(ii)                    under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,

 

if that tax is imposed on or calculated by reference to the net income or profits received or receivable (but not any sum deemed to be received or receivable) by that Finance Party or is a franchise or similar tax; or

 

(b)                    with respect to any tax assessed on a Finance Party which is imposed as a result of a present or former connection between that Finance Party and the jurisdiction imposing that tax (or any political subdivision thereof) (other than any such connection arising as a result of that Finance Party having executed, delivered, become a party to, enforced or performed its obligations or received payments under, this agreement or any other Finance Document); or

 

(c)                     to the extent a loss, liability or cost is compensated for by an increased payment under Clause 11.2 (Tax gross-up); or

 

(d)                    to the extent that the loss, liability or cost is a result of failure by the Protected Party to comply with Clause 11.4 (Status of Foreign Lender).

 

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11.3.3                      A Protected Party making, or intending to make a claim under sub-clause 11.3.1 above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Original Borrower.

 

11.3.4                      A Protected Party shall, on receiving a payment from an Obligor under this Clause 11.3, notify the Agent.

 

11.4                     Status of Foreign Lender

 

Any Foreign Lender that is entitled to an exemption from or reduction in the rate of any Tax Deduction from any payment under any of the Finance Documents under the law of the jurisdiction which requires or would require the Tax Deduction, or under any treaty to which that jurisdiction is a party, shall deliver to the Original Borrower (with a copy to the Agent), at the time or times reasonably specified by the Original Borrower or the Agent, such properly completed and executed documentation as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Finance Party, if requested by the Original Borrower or the Agent, shall deliver such other documentation reasonably specified by the Original Borrower or the Agent as will enable the Original Borrower or the Agent to determine whether or not such Finance Party is subject to backup withholding or information reporting requirements.

 

11.5                     Tax Credit

 

If an Obligor makes a Tax Payment and the relevant Finance Party determines that:

 

11.5.1                      a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to that Tax Payment; and

 

11.5.2                      that Finance Party has obtained, utilised and retained that Tax Credit,

 

the Finance Party shall pay an amount to the Obligor which that Finance Party reasonably determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.

 

11.6                     Value added tax

 

11.6.1                      All amounts set out, or expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or in part) constitute the consideration for VAT purposes shall be deemed to be exclusive of any VAT which is chargeable on such supply, and accordingly, subject to sub-clause 11.6.3 below, if VAT is chargeable on any supply made by any Finance Party to any Party under a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT (and such Finance Party shall promptly provide an appropriate VAT invoice to such Party).

 

11.6.2                      If VAT is chargeable on any supply made by any Finance Party (the “Supplier”) to any other Finance Party (the “Recipient”) under a Finance Document, and any Party (the “Relevant Party”) is required by the terms of any Finance Document to pay an amount equal to the consideration for such supply to the Supplier (rather than being required to reimburse the Recipient in 

 

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respect of that consideration), such Party shall also pay to the Supplier (in addition to and at the same time as paying such amount) an amount equal to the amount of such VAT.  The Recipient will promptly pay to the Relevant Party an amount equal to any credit or repayment from the relevant tax authority which it reasonably determines relates to the VAT chargeable on that supply.

 

11.6.3                      Where a Finance Document requires any Party to reimburse a Finance Party for any costs or expenses, that Party shall also at the same time pay and indemnify the Finance Party against all VAT incurred by the Finance Party in respect of the costs or expenses to the extent that the Finance Party reasonably determines that neither it nor any other member of any group of which it is a member for VAT purposes is entitled to credit or repayment from the relevant tax authority in respect of the VAT.

 

12.                           INCREASED COSTS

 

12.1                     Increased costs

 

12.1.1                      Subject to Clause 12.3 (Exceptions) the Original Borrower shall, within three Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of:

 

(a)                     the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation; or

 

(b)                    compliance with any law or regulation made after the date of this Agreement,

 

together, a “Change in Law”.

 

12.1.2                      In this Agreement “Increased Costs” means:

 

(a)                     a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital to a level below that which such Finance Party (or Affiliate) would have achieved but for such Change in Law (taking into consideration such Finance Party’s (or Affiliates’) policies with respect to capital adequacy as generally applied);

 

(b)                   an additional or increased cost; or

 

(c)                    a reduction of any amount due and payable under any Finance Document,

 

which in the good faith determination of such Finance Party is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into a commitment or funding or performing its obligations under any Finance Document.

 

12.2                     Increased cost claims

 

12.2.1                      A Finance Party intending to make a claim pursuant to Clause 12.1 (Increased costs) shall notify the Agent, following which the Agent shall promptly notify the Original Borrower.

 

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12.2.2                      Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs and setting out:

 

(a)                     the basis, in reasonable detail, for the determination of such additional amount or amounts necessary to compensate such Lender as aforesaid; and

 

(b)                    the basis, in reasonable detail, for the computation of such amount or amounts, which shall be consistently applied.

 

12.3                     Exceptions

 

12.3.1                      Clause 12.1 (Increased costs) does not apply to the extent any Increased Cost is:

 

(a)                     attributable to a Tax Deduction required by law to be made by an Obligor;

 

(b)                    compensated for by Clause 11.3 (Tax indemnity)  (or would have been compensated for under Clause 11.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in sub-clause 11.3.2 of Clause 11.3 (Tax indemnity) applied) or because of failure of such Finance Party to comply with Clause 10.3) (Tax indemnity);

 

(c)                     compensated for by the payment of the Mandatory Costs Rate;

 

(d)                    attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation;

 

(e)                     attributable to an increase in the rate of corporation tax; or

 

(f)                       attributable to the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (but excluding any amendment arising out of Basel III)  (“Basel II”) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).

 

12.3.2                      Additionally Clause 12.1 (Increased costs) shall not apply to Increased Costs with respect to taxes imposed on or measured by the net income or net profits of a Lender pursuant to the laws of the jurisdiction in or under the laws of which it is organised or the jurisdiction in which the principal office or applicable lending office of such Lender is located or in which it conducts a trade or business or has a permanent establishment, or has a present or former connection with such jurisdiction, or any subdivision thereof or therein.

 

12.3.3                      In this Clause 12.3, a reference to:

 

(a)                     “Basel III” means:

 

(i)                       the agreements on capital requirements, a leverage ratio and 

 

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liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated; and

 

(ii)                    any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”;

 

(b)                    a “Tax Deduction” has the same meaning given to the term in Clause 11.1 (Definitions).

 

13.                           ILLEGALITY

 

13.1                     If, at any time, any Lender determines in good faith that it is or will become unlawful or prohibited pursuant to any request from or requirement of any central bank or other financial, monetary or other authority (being a request or requirement with which banks are accustomed to comply and the Lender so complies with respect to its clients generally) for such Lender to make, fund, issue, participate in or allow to remain outstanding all or part of its share of the Letters of Credit, then that Lender shall, promptly after becoming aware of the same, deliver to the Original Borrower through the Agent a notice to that effect.

 

13.2                     Such Lender shall not thereafter be obliged to participate in any Letter of Credit or issue any Letter of Credit (whichever shall be so affected) and the amount of its Available Commitment shall be immediately reduced to zero and if the Agent on behalf of such Lender so requires, the Original Borrower shall on such date as the Agent shall have specified:

 

13.2.1                      repay all amounts owing to such Lender hereunder; and

 

13.2.2                      ensure that the liabilities of such Lender under or in respect of each affected Letter of Credit is reduced to zero.

 

14.                           OTHER INDEMNITIES

 

14.1                     Currency Indemnity

 

14.1.1                      If any sum (a “Sum”) due from an Obligor under the Finance Documents or any order, judgment given or made in relation thereto has to be converted from the currency (the “First Currency”) in which such Sum is payable into another currency (the “Second Currency”) for the purpose of:

 

(a)                     making or filing a claim or proof against such Obligor;

 

(b)                    obtaining an order, judgment in any court or other tribunal; or

 

(c)                     enforcing any order, judgment given or made in relation thereto,

 

the Original Borrower  shall indemnify each person to whom such Sum is due from and against any loss suffered or incurred as a result of any discrepancy between (a) the rate of exchange used for such purpose to convert such Sum 

 

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from the First Currency into the Second Currency and (b) the rate or rates of exchange available to such person at the time of receipt of such Sum.

 

14.1.2                      Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

 

14.2                     Other indemnities

 

Without duplication of any expense reimbursement obligations or indemnities contained elsewhere in this Agreement or the other Finance Documents, each Obligor shall, within five Business Days of demand, indemnify each Secured Party and the Arranger against any cost, loss or liability incurred by that Secured Party or Arranger (and invoiced in reasonable detail) as a result of:

 

14.2.1                      the occurrence of any Event of Default;

 

14.2.2                      a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 30 (Sharing among the Finance Parties); or

 

14.2.3                      issuing or making arrangements to issue a Letter of Credit requested by a Borrower in a Utilisation Request but not issued by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone).

 

14.3                     Indemnity to the Agent

 

Without duplication of any expense reimbursement obligations or indemnities contained elsewhere in this Agreement or the other Finance Documents, the Original Borrower  shall, within five Business Days of demand, indemnify the Agent against any cost, loss or liability incurred by the Agent (acting reasonably and invoiced in reasonable detail) as a result of:

 

14.3.1                      investigating any event which it reasonably believes is a Default; or

 

14.3.2                      acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised.

 

14.4                     Indemnity to the Security Trustee

 

14.4.1                      Without duplication of any expense reimbursement obligations contained elsewhere in this Agreement or the other Finance Documents, each Obligor shall, within five Business Days of demand, indemnify the Security Trustee and every Receiver and Delegate against any cost, loss or liability incurred by any of them (and invoiced in reasonable detail) as a result of:

 

(a)                     the taking, holding, protection or enforcement of the Transaction Security;

 

(b)                    the exercise of any of the rights, powers, discretions and remedies vested in the Security Trustee and each Receiver and Delegate by the Finance Documents or by law; and

 

(c)                     any default by any Obligor or any other member of the Group that is party 

 

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to a Finance Document in the performance of any of the obligations expressed to be assumed by it in the Finance Documents.

 

14.4.2                      The Security Trustee may, in priority to any payment to the Secured Parties, indemnify itself out of the Charged Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 14.4 and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all moneys payable to it.

 

14.5                     Exceptions

 

The indemnities referred to in Clauses 14.3 (Indemnity to the Agent) and 14.4 (Indemnity to the Security Trustee) shall not apply to the extent that the cost, loss or liability concerned have resulted from the gross negligence or wilful misconduct of the Agent or Security Trustee (as the case may be).

 

15.                           MITIGATION

 

15.1                     If, in respect of any Lender, circumstances arise which would or would upon the giving of notice result in:

 

15.1.1                      an increase in any sum payable to it or for its account pursuant to Clause 11.2 (Tax Gross-up);

 

15.1.2                      a claim for indemnification pursuant to Clause 11.3 (Tax Indemnity) or Clause 12 (Increased Costs); or

 

15.1.3                      the reduction of its Available Commitment to zero or any repayment to be made pursuant to Clause 13 (Illegality),

 

then, without in any way limiting, reducing or otherwise qualifying the rights of such Lender or the obligations of the Obligors under any of the Clauses referred to in sub-clauses 15.1.1, 15.1.2 and 15.1.3, such Lender shall promptly upon becoming aware of such circumstances notify the Agent thereof (who shall promptly notify the Original Borrower) and, in consultation with the Agent and the Original Borrower and to the extent that it can do so lawfully and without prejudice to its own position, take reasonable steps (including a change of location of its Facility Office or the transfer of its rights, benefits and obligations hereunder to another financial institution which is an Approved Credit Institution and which is acceptable to the Original Borrower and willing to participate in the Facility) to mitigate the effects of such circumstances provided that such Lender shall be under no obligation to take any such action if, in the good faith judgment of such Lender, to do so might be reasonably expected to have any adverse effect upon its business, operations or financial condition (in each case, taken as a whole).

 

15.2                    In connection with the occurrence of any of the events set forth in sub-clauses 15.1.1 through 15.1.3, the Original Borrower, at its sole expense and effort, shall have the right, if no Default or Event of Default then exists, to replace such Lender (the “Replaced Lender”), with one or more person or persons (collectively, the “Replacement Lender”) reasonably acceptable to the Agent at which time the Replaced Lender shall assign or transfer, without recourse (in accordance with and subject to the restrictions contained in 

 

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Clause 25 (Changes to the Lenders)), all its interests, rights and obligations under this Agreement to the Replacement Lender provided that:

 

15.2.1                      the Replacement Lender shall pay to the Replaced Lender in respect thereof an amount equal to the sum of:

 

(a)                     an amount equal to all Unpaid Sums that have been funded by (and not reimbursed to) such Replaced Lender, together with all then unpaid interest with respect thereto at such time; and

 

(b)                    an amount equal to all accrued, but theretofore unpaid, fees owing to the Replaced Lender pursuant to Clause 16 (Commitment Commission and fees);

 

15.2.2                      all obligations of any Borrower under the Finance Documents owing to the Replaced Lender (other than those specifically described in sub-clause 15.2.1 above in respect of which the assignment purchase price has been, or is concurrently being, paid), shall be paid in full to such Replaced Lender concurrently with such replacement;

 

15.2.3                      such assignment or transfer is likely to result in a reduction in such compensation or payments; and

 

15.2.4                      no Lender shall be required to become a Replaced Lender if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Original  Borrower to require such assignment or transfer cease to apply.

 

For the avoidance of doubt, no Replaced Lender shall be required to execute, sign or deliver any document or assignment in order to be replaced in accordance with this Clause 15.2.

 

16.                           COMMITMENT COMMISSION AND FEES

 

16.1                     Commitment Commission on the Facility

 

The Original  Borrower shall pay to the Agent for account of each Lender a commitment commission on the amount of such Lender’s Available Commitment from day to day during the Availability Period, such commitment commission to be calculated at a rate of:

 

(a)                                      for any period in which all or any part of the Borrowing Base consists of Eligible Investment Grade Securities, 0.25 per cent. per annum; and

 

(b)                                     at all other times, 0.20 per cent. per annum,

 

on such amount and payable in arrear on the last day of each successive period of three months which ends during such period and on the last day of the Availability Period  provided however, that for so long as a Lender is a Defaulting Lender, no commitment commission hereunder shall accrue or be payable to such Lender until such Lender ceases to be a Defaulting Lender.

 

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16.2                     Arrangement Fee

 

The Original  Borrower shall pay to the Arranger, the arrangement fees specified in a Fee Letter between the Arranger and the Original  Borrower at the times, and in the amounts, specified in such letter.

 

16.3                     Structuring Fee

 

The Original  Borrower shall pay to the Structuring Agent, the structuring fees specified in a Fee Letter between the Structuring Agent and the Original  Borrower at the times, and in the amounts, specified in such letter.

 

16.4                     Agency Fees

 

The Original  Borrower shall pay to the Agent for its own account the agency fees specified in a Fee Letter between the Agent and the Original  Borrower at the times, and in the amounts, specified in such letter.

 

17.                           COSTS AND EXPENSES

 

17.1                     Transaction expenses

 

Without duplication of any expense reimbursement obligations or indemnities contained elsewhere in this Agreement or the other Finance Documents, the Original  Borrower shall within five Business Days of demand, pay the Agent, the Arranger and the Security Trustee the amount of all costs and expenses (including, but not limited to, legal fees of one legal counsel in each relevant jurisdiction) reasonably incurred by any of them (and invoiced in reasonable detail) and, in the case of the Security Trustee, by any Receiver or Delegate, in connection with the negotiation, preparation, execution and perfection of:

 

17.1.1                       this Agreement and any other documents referred to in this Agreement and the Transaction Security; and

 

17.1.2                      any other Finance Documents executed after the date of this Agreement.

 

17.2                     Amendment costs

 

Without duplication of any expense reimbursement obligations or indemnities contained elsewhere in this Agreement or the other Finance Documents, if (a) an Obligor or any other member of the Group that is party to a Finance Document requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 31.9 (Change of currency), the Original  Borrower shall, within five Business Days of demand, reimburse each of the Agent and the Security Trustee for the amount of all costs and expenses (including, but not limited to, legal fees of one legal counsel in each relevant jurisdiction) reasonably incurred by the Agent and the Security Trustee (and invoiced in reasonable detail) and in the case of the Security Trustee, by any Receiver or Delegate, in responding to, evaluating, negotiating or complying with that request or requirement.

 

17.3                     Security Trustee’s ongoing costs

 

17.3.1                      Without duplication of any expense reimbursement obligations or indemnities contained elsewhere in this Agreement or the other Finance Documents, in the event of (i) the occurrence of a Default or (ii) the Security Trustee considering it necessary or expedient or (iii) the Security Trustee being requested by an Obligor or any other member of the Group that is party to a Finance Document or the Majority Lenders to undertake duties which the Security Trustee and the 

 

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Original  Borrower agree to be of an exceptional nature and/or outside the scope of the normal duties of the Security Trustee under the Finance Documents, the Original  Borrower shall pay to the Security Trustee any additional remuneration that may be agreed between them.

 

17.3.2                      Without duplication of any expense reimbursement obligations or indemnities contained elsewhere in this Agreement or the other Finance Documents, if the Security Trustee and the Original  Borrower fail to agree upon the nature of the duties or upon any additional remuneration, that dispute shall be determined by an investment bank (acting as an expert and not as an arbitrator) selected by the Security Trustee and approved by the Original  Borrower or, failing approval, nominated (on the application of the Security Trustee) by the President for the time being of the Law Society of England and Wales (the costs of the nomination and of the investment bank being payable by the Original  Borrower) and the determination of any investment bank shall be final and binding upon the parties to this Agreement.

 

17.4                     Enforcement and preservation costs

 

Without duplication of any expense reimbursement obligations or indemnities contained elsewhere in this Agreement or the other Finance Documents, the Original  Borrower shall, within five Business Days of demand, pay to Agent the amount of all costs and expenses (including, but not limited to, legal fees of one legal counsel in each relevant jurisdiction but excluding costs and expenses to the extent that they result from the gross negligence or wilful misconduct of the Agent or any of the other Finance Parties) incurred by the Agent (and invoiced in reasonable detail) in connection with the enforcement of, or the preservation of any rights under, any Finance Document and the Transaction Security and any proceedings instituted by or against the Security Trustee as a consequence of taking or holding the Transaction Security or enforcing these rights.

 

17.5                     Stamp taxes

 

Without duplication of any expense reimbursement obligations or indemnities contained elsewhere in this Agreement or the other Finance Documents, the Original  Borrower shall pay and, within five Business Days of demand, indemnify each Secured Party and the Arrangers against any stamp duty, registration and other similar Taxes which are incurred by that Secured Party or the Arrangers arising from any payment made under any Finance Document or from the execution, delivery, performance, enforcement or registration of any Finance Document.

 

18.                           DEFAULT INTEREST AND BREAK COSTS

 

18.1                     Default Interest Periods

 

If an Obligor fails to pay:

 

18.1.1                      any amount payable by it pursuant to sub-clause 7.1.1 of Clause 7.1 (Borrowers’ Indemnity to Lenders), the period beginning on the date on which the relevant Finance Party paid any sum due and payable under the relevant Letter of Credit and ending on the date upon which the obligation of such Obligor  to pay such sum is discharged shall be divided into successive periods:

 

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(a)                     the first three periods being periods of a duration of one day each, which (other than the first) shall start on the last day of the preceding such period; and

 

(b)                    thereafter, each such period shall start on the last day of the preceding period and the duration of each of which shall (except as otherwise provided in this Clause 18) be selected by the Agent;

 

18.1.2                      any other amount payable by it under a Finance Document on its due date, or if any sum due and payable by an Obligor under any judgment of any court in connection herewith is not paid on the date of such judgment, the period beginning on such due date or, as the case may be, the date of such judgment and ending on the date upon which the obligation of such Obligor  to pay such sum is discharged shall be divided into successive periods, each of which (other than the first) shall start on the last day of the preceding such period and the duration of each of which shall (except as otherwise provided in this Clause 18) be selected by the Agent.

 

18.2                     Default Interest

 

An Unpaid Sum:

 

18.2.1                      which is a sum referred to in sub-clause 18.1.1 of Clause 18.1 (Default Interest Periods) above shall bear interest:

 

(a)                     during the first three Interest Periods in respect thereof at LIBOR at the overnight rate on the Quotation Date therefor; and

 

(b)                    during each Interest Period thereafter, at the rate per annum which is three per cent. per annum above LIBOR on the Quotation Date therefor;

 

18.2.2                      which is a sum referred to in sub-clause 18.1.2 of Clause 18.1 (Default Interest Periods) above shall bear interest during each Interest Period in respect thereof at the rate per annum which is three per cent. per annum above LIBOR, on the Quotation Date therefor.

 

18.3                     Payment of Default Interest

 

Any interest which shall have accrued under Clause 18.2 (Default Interest) in respect of an Unpaid Sum shall be due and payable and shall be paid by the Obligor owing such Unpaid Sum on the last day of each Interest Period in respect thereof or on such other dates as the Agent may specify by notice to such Obligor.

 

18.4                     Break Costs

 

If any Lender or the Agent on its behalf receives or recovers all or any part of an Unpaid Sum otherwise than on the last day of an Interest Period relating thereto, the relevant Borrower shall pay to the Agent on demand for account of such Lender an amount equal to the amount (if any) by which (a) the additional interest which would have been payable on the amount so received or recovered had it been received or recovered on the last day of that Interest Period exceeds (b) the amount of interest which in the opinion of the Agent (acting reasonably) would have been payable to the Agent on the last day of

 

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that Interest Period in respect of a deposit in the currency of the amount so received or recovered equal to the amount so received or recovered placed by it with a prime bank in London for a period starting on the first Business Day following the date of such receipt or recovery and ending on the last day of that Interest Period.

 

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SECTION 7
 GUARANTEE

 

19.                           GUARANTEE AND INDEMNITY

 

19.1                     Guarantee and indemnity

 

Each Guarantor irrevocably and unconditionally jointly and severally:

 

19.1.1                      guarantees to each Finance Party punctual performance by each Borrower of all that Borrower’s obligations under the Finance Documents;

 

19.1.2                      undertakes with each Finance Party that whenever a Borrower does not pay any amount when due under or in connection with any Finance Document, such Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and

 

19.1.3                      indemnifies each Finance Party immediately on demand against any cost, loss or liability suffered by that Finance Party if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal.  The amount of the cost, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover.

 

19.2                     Continuing guarantee

 

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by the Borrowers under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

 

19.3                     Reinstatement

 

If any payment by a Borrower or any discharge given by a Finance Party (whether in respect of the obligations of a Borrower or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event:

 

19.3.1                      the liability of that Borrower shall continue as if the payment, discharge, avoidance or reduction had not occurred; and

 

19.3.2                      each Finance Party shall be entitled to recover the value or amount of that security or payment from that Borrower as if the payment, discharge, avoidance or reduction had not occurred.

 

19.4                     Waiver of defences

 

The obligations of each Guarantor under this Clause 19 will not be affected by any act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 19 (without limitation and whether or not known to it or any Finance Party) including:

 

19.4.1                      any time, waiver or consent granted to, or composition with, a Borrower or other person;

 

19.4.2                      the release of a Borrower or any other person under the terms of any composition or arrangement with any creditor of an Obligor;

 

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19.4.3                      the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, a Borrower or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

 

19.4.4                      any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a Borrower or any other person;

 

19.4.5                      any amendment, novation, supplement, extension (whether of maturity or otherwise) or restatement (in each case however fundamental and of whatsoever nature, and whether or not more onerous) or replacement of a Finance Document or any other document or security;

 

19.4.6                      any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or

 

19.4.7                      any insolvency or similar proceedings.

 

19.5                     Guarantor Intent

 

Without prejudice to the generality of Clause 19.4 (Waiver of Defences), each Guarantor expressly confirms that it intends that this guarantee shall extend from time to time to any (however fundamental and of whatsoever nature and whether or not more onerous) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents for the purposes of or in connection with any of the following:

 

19.5.1                      acquisitions of any nature;

 

19.5.2                      increasing working capital;

 

19.5.3                      enabling investor distributions to be made;

 

19.5.4                      carrying out restructurings;

 

19.5.5                      refinancing existing facilities;

 

19.5.6                      refinancing any other indebtedness;

 

19.5.7                      making facilities available to new borrowers;

 

19.5.8                      any other variation or extension of the purposes for which any such facility or amount might be made available from time to time; and

 

19.5.9                      any fees, costs and/or expenses associated with any of the foregoing.

 

19.6                     Immediate recourse

 

Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from it under this Clause 19.  This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

 

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19.7                     Appropriations

 

Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:

 

19.7.1                      refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and

 

19.7.2                      hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of that Guarantor’s liability under this Clause 19.

 

19.8                     Deferral of Guarantor’s rights

 

Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:

 

19.8.1                      to be indemnified by a Borrower;

 

19.8.2                      to claim any contribution from any other guarantor of any Borrower’s obligations under the Finance Documents;

 

19.8.3                      to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;

 

19.8.4                      to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Guarantor has given a guarantee, undertaking or indemnity under Clause 19.1 (Guarantee and Indemnity);

 

19.8.5                      to exercise any right of set-off against any Obligor; and/or

 

19.8.6                      to claim or prove as a creditor of any Obligor in competition with any Finance Party.

 

If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by any Borrower under or in connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with Clause 31 (Payment mechanics) of this Agreement.

 

19.9                     Release of Guarantors’ right of contribution

 

If any Guarantor (a “Retiring Guarantor”) ceases to be a Guarantor in accordance with the terms of the Finance Documents, then on the date such Retiring Guarantor ceases to

 

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be a Guarantor:

 

19.9.1                      that Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or future and whether actual or contingent) to make a contribution to any other Guarantor arising by reason of the performance by any other Guarantor of its obligations under the Finance Documents; and

 

19.9.2                      each other Guarantor waives any rights it may have by reason of the performance of its obligations under the Finance Documents to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under any Finance Document or of any other security taken pursuant to, or in connection with, any Finance Document where such rights or security are granted by or in relation to the assets of the Retiring Guarantor.

 

19.10               Additional security

 

This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.

 

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SECTION 8
 REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

 

20.                           REPRESENTATIONS

 

On the date of this Agreement, each Obligor makes to the Finance Parties the representations and warranties set out in Clauses 20.1 (Corporate Status) to 20.7 (Projections and Assumptions), 20.15 (Insurance Licenses), and Clauses 20.19 (No default) to 20.23 (No Winding-up) and the Original Guarantor makes to the Finance Parties the representations and warranties set out in Clauses 20.8 (Financial Condition) to 20.14 (Compliance with Statutes and Agreements), 20.16 (Security Documents) and Clauses 20.17 (Properties; Liens; and Insurance) and 20.18 (Solvency) in each case in relation to itself and (where applicable) its Significant Subsidiaries.

 

20.1                     Corporate Status

 

It and each of its Significant Subsidiaries:

 

20.1.1                      is a duly organised and validly existing corporation or business trust or other entity in good standing under the laws of the jurisdiction of its organisation and has the corporate or other organisational power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage; and

 

20.1.2                      has been duly qualified and is authorised to do business and is in good standing in all jurisdictions where it is required to be so qualified,

 

except, in the case of sub-clauses 20.1.1 (other than in respect of the Obligors or any other member of the Group that is party to a Finance Document) and 20.1.2, where the failure to be so qualified, authorised or in good standing, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

20.2                     Corporate Power and Authority

 

20.2.1                      It and each of its subsidiaries that is party to any Finance Document has the corporate power and authority to execute, deliver and carry out the terms and provisions of the Finance Documents to which it is a party and has taken all necessary corporate action to authorise the execution, delivery and performance of such Finance Documents.

 

20.2.2                      It and each of its subsidiaries that is party to any Finance Document has duly executed and delivered each Finance Document to which it is a party and, subject to the Legal Reservations, each such Finance Document constitutes the legal, valid and binding obligation of such Obligor or such subsidiary enforceable against it in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally and general principles of equity regardless of whether enforcement is sought in a proceeding in equity or at law.

 

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20.3                     No Contravention of Agreements or Organisational Documents

 

Neither the execution, delivery and performance, by it or any of its subsidiaries that is party to any Finance Document, of this Agreement or the other Finance Documents to which it is a party nor compliance with the terms and provisions thereof, nor the consummation of the transactions contemplated therein:

 

20.3.1                      will contravene any applicable provision of any law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality;

 

20.3.2                      will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (other than Liens in favour of the Security Trustee pursuant to the Security Documents) upon any of its property or assets or those of any of its Significant Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, credit agreement or any other material instrument to which it or any of its Significant Subsidiaries is a party or by which it or any of its property or assets are bound or to which it may be subject; or

 

20.3.3                      will violate any provision of its certificate of incorporation, by-laws or other organisational documents, nor those of its Significant Subsidiaries.

 

20.4                     Litigation and Environmental Matters

 

There are no actions, suits or proceedings pending or, to the best of its knowledge, threatened involving it or any of its Significant Subsidiaries (including with respect to this Agreement or any other Finance Document) that, either individually or in the aggregate, have had, or would reasonably be expected to have, a Material Adverse Effect.  Except for any matters that, either individually or in the aggregate, have not had, and would not reasonably be expected to have, a Material Adverse Effect, neither the Original Guarantor nor any of its Significant Subsidiaries:

 

20.4.1                      has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law;

 

20.4.2                      has become subject to any Environmental Liability;

 

20.4.3                      has received notice of any claim with respect to any Environmental Liability; or

 

20.4.4                      knows of any basis for any Environmental Liability.

 

20.5                     Approvals

 

Any:

 

20.5.1                      order, consent, approval, license, authorisation, or validation of, or filing, recording or registration with, or exemption by, any foreign or domestic governmental or public body or authority, or any subdivision thereof, which is required by it or any of its Significant Subsidiaries; or

 

20.5.2                      third party approval, permit or license required to be obtained by it or any of its Significant Subsidiaries,

 

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in each case in connection with (i) the transactions contemplated by the Finance Documents or (ii) the legality, validity, binding effect or enforceability of any Finance Document, has been obtained or effected and is in full force and effect, or will be obtained or effected within the period required by law.

 

20.6                     Investment Company Act

 

It is not an “investment company” or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940 of the US, as amended.

 

20.7                     Projections and Assumptions

 

The financial projections contained in the Business Plan have been prepared based on good faith estimates and assumptions believed by the Original Borrower to be reasonable and attainable at the time made, it being recognised by Finance Parties that such projections as to future events are not to be viewed as facts and are subject to significant uncertainties and contingencies many of which are beyond the control of the Obligors and that actual results during the period or periods covered by any such projections may differ from the projected results.

 

20.8                     Financial Condition

 

20.8.1                      The Original Guarantor has heretofore furnished to the Agent (on behalf of the Lenders) its consolidated balance sheet and consolidated statements of operations and comprehensive income, (loss), shareholders’ equity and cash flows as of and for the fiscal year ended 31 December 2010 reported on by PricewaterhouseCoopers, independent public accountants. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Original Guarantor and its consolidated Significant Subsidiaries as of such dates and for such periods in accordance with US GAAP.

 

20.8.2                      As of the Closing Date, nothing has occurred since 31 December 2010 either individually or in the aggregate, which has resulted in, or would reasonably be expected to result in, any material adverse condition or any material adverse change which, in either case, has a Material Adverse Effect, in or affecting:

 

(a)                     the business, operations, assets, liabilities or financial condition of the Original Guarantor and its Significant Subsidiaries, taken as a whole; or

 

(b)                    the rights and remedies of any Finance Party or the ability of the Obligors, taken as a whole, to perform their respective obligations owed to any Finance Party under this Agreement or any other Finance Document.

 

20.9                     Tax Returns and Payments

 

20.9.1                      Except where the failure to do so would not reasonably be expected, individually or in aggregate, to have a Material Adverse Effect, the Original Guarantor and its Significant Subsidiaries:

 

(a)                     have timely filed or caused to be timely filed with the appropriate taxing authority (taking into account any applicable extension within which to file) all material income and other material tax returns (including any

 

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statements, forms and reports), domestic and foreign, required to be filed by the Original Guarantor and its Significant Subsidiaries; and

 

(b)                    have timely paid, collected or remitted or caused to have timely paid, collected or remitted all material Taxes payable by them which have become due and assessments which have become due, except for those contested in good faith and for which adequate reserves have been established in accordance with applicable GAAP.

 

20.9.2                      To the best knowledge of the Original Guarantor, there is no action, suit, proceeding, investigation, audit or claim now pending or proposed or threatened by any authority regarding any Taxes relating to the Original Guarantor or any of its Significant Subsidiaries, which, either individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.

 

20.9.3                      To the best knowledge of the Original Guarantor, no Tax Liens have been filed and no claims are pending or proposed or threatened with respect to any Taxes for any taxable period, except for Liens permitted under Clause 23.14 (Liens) and claims which, either individually or in the aggregate, have not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

20.10               Compliance with ERISA

 

20.10.1                Except as, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect, the Original Guarantor and its ERISA Affiliates:

 

(a)                     have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance with the applicable provisions of ERISA and the Code; and

 

(b)                    have not incurred any liability to the PBGC or any Plan or Multiemployer Plan (other than to make contributions in the ordinary course of business).

 

20.10.2                Except as, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect:

 

(a)                     there has not been a determination that any Plan is, or is expected to be, in “at risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); and

 

(b)                    there has not been a receipt by any Original Guarantor or any of its ERISA Affiliates of any notice of the imposition of withdrawal liability or of a determination that a Multiemployer Plan is, or is expected to be, in “endangered” or “critical” status, within the meaning of Section 305 of ERISA.

 

20.10.3                Except as, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect:

 

(a)                     each Foreign Pension Plan has been maintained in compliance with its

 

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terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities;

 

(b)                    all contributions required to be made with respect to a Foreign Pension Plan have been timely made;

 

(c)                     neither the Original Guarantor nor any of its Significant Subsidiaries has incurred any obligation in connection with the termination of, or withdrawal from, any Foreign Pension Plan; and

 

(d)                    the present value of the accrued benefit liabilities (whether or not vested) under each Foreign Pension Plan that is required to be funded, determined as of the end of the Original Guarantor’s most recently ended fiscal year on the basis of actuarial assumptions, each of which is reasonable, did not exceed the current value of the assets of such Foreign Pension Plan allocable to such benefit liabilities.

 

20.11               Subsidiaries

 

20.11.1                Listed in Schedule 14 (Subsidiaries) is a complete and correct list of all of the subsidiaries of the Original Guarantor as of the Closing Date, together with, for each such subsidiary:

 

(a)                     the jurisdiction of organisation of such subsidiary;

 

(b)                    each person holding direct ownership interests in such subsidiary; and

 

(c)                     the percentage ownership of such subsidiary represented by such ownership interests.

 

20.11.2                Except as disclosed in Schedule 14 (Subsidiaries), as of the Closing Date, each of the Original Guarantor and its Significant Subsidiaries owns, free and clear of Liens, and has the unencumbered right to vote, all outstanding ownership interests in each person shown to be held by it in Schedule 14 (Subsidiaries).

 

20.11.3                As of the Closing Date, there are no restrictions on the Original Guarantor or any of its Significant Subsidiaries which prohibit or otherwise restrict the transfer of cash or other assets from any Significant Subsidiary of the Original Guarantor to the Original Guarantor, other than:

 

(a)                     prohibitions or restrictions existing under or by reason of this Agreement or the other Finance Documents;

 

(b)                    prohibitions or restrictions existing under or by reason of Legal Requirements;

 

(c)                     prohibitions and restrictions permitted by Schedule 12 (Existing Intercompany Arrangements and Agreements) or Clause 23.21 (Limitation on Certain Restrictions on subsidiaries); and

 

(d)                    other prohibitions or restrictions which, either individually or in the

 

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aggregate, have not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

20.12               Capitalisation

 

As of the Closing Date, the authorised capital stock of:

 

20.12.1                the Original Borrower consists of 500,000,000 shares, par value $0.0020 per share;

 

20.12.2                the Original Guarantor consists of 571,428,571.4 shares, par value $0.175 per share.

 

20.13               Indebtedness

 

As of the Closing Date, the Original Guarantor and its consolidated Significant Subsidiaries have no outstanding Indebtedness for borrowed money required to be set forth on a quarterly balance sheet prepared in accordance with US GAAP other than:

 

20.13.1                as set forth on the Original Guarantor’s consolidated balance sheet as of 30 September 2010;

 

20.13.2                borrowings since such date under the revolving credit facilities, letter of credit facilities and lines of credit of the Original Guarantor and/or its subsidiaries; and

 

20.13.3                Permitted Subsidiary Indebtedness.

 

20.14               Compliance with Statutes and Agreements

 

20.14.1                The Original Guarantor and each of its Significant Subsidiaries is in compliance with all applicable statutes, regulations, rules and orders of, and all applicable restrictions imposed by, and has filed or otherwise provided all material reports, data, registrations, filings, applications and other information required to be filed with or otherwise provided (or will do so within the period required by law) to, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property (including compliance with all applicable Environmental Laws), except where the failure to comply or file or otherwise provide, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

20.14.2                All regulatory approvals required by the Original Guarantor and each of its Significant Subsidiaries are in full force and effect on the date hereof, except where the failure of such approvals to be in full force and effect, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

20.14.3                The Original Guarantor and each of its Significant Subsidiaries is in compliance with all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

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20.15               Insurance Licenses

 

20.15.1                There is, in relation to itself and each of its Significant Subsidiaries:

 

(a)                     no Insurance License that is the subject of a proceeding for suspension, revocation or limitation or any similar proceedings;

 

(b)                    no sustainable basis for such a suspension, revocation or limitation; and

 

(c)                     no such suspension, revocation or limitation threatened by any Applicable Insurance Regulatory Authority,

 

that, in each instance under paragraphs (a), (b) and (c) above and either individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.

 

20.15.2                As of the Closing Date, neither it nor any of its Significant Subsidiaries that is a Regulated Insurance Company transacts any Insurance Business, directly or indirectly, in any jurisdiction without all Insurance Licenses required by the Applicable Insurance Regulatory Authority in such jurisdiction, except where the failure to have such Insurance Licenses has not had, and would not reasonably be expected to have, a Material Adverse Effect.  For the purposes of this sub-clause 20.15.2, “Insurance Licenses”  means material licences (including licences or certificates of authority from Applicable Insurance Regulatory Authorities), permits or authorisations to transact insurance and reinsurance business.

 

20.16               Security Documents

 

20.16.1                The Security Documents create, as security for Secured Obligations, valid and enforceable security interests in and Liens on all of the Collateral, which, subject to the Legal Reservations and to Liens having priority by operation of law, rank superior to and prior to the rights of all third persons and subject to no other Liens.

 

20.16.2                No filings or recordings are required in order to ensure the enforceability, perfection or priority of the security interests created under the Security Documents, except for filings or recordings which shall have been previously made or which are otherwise made within the period prescribed by law for such filings or recordings.

 

20.17               Properties; Liens; and Insurance

 

20.17.1                The Original Guarantor and its Significant Subsidiaries have good title to, or valid leasehold interests in, all real and personal property material to the businesses of the Original Guarantor and its Significant Subsidiaries, taken as a whole except where not having such title, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

20.17.2                There exists no Lien (including any Lien arising out of any attachment, judgment or execution) of any kind, on, in or with respect to any of the property of the Original Guarantor or any of its Significant Subsidiaries, in each case

 

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except as expressly permitted by Clause 23.14 (Liens).

 

20.17.3                The Original Guarantor and its Significant Subsidiaries own, or are licensed to use, all trademarks, trade names, copyrights, patents and other intellectual property material to the businesses of the Original Guarantor and its Significant Subsidiaries, taken as a whole, and the use thereof by the Original Guarantor or such Significant Subsidiary does not infringe upon the rights of any other person, except for any such infringements that, either individually or in the aggregate, have not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

20.17.4                As of the Closing Date, all premiums due in respect of each material insurance policy maintained by the Original Guarantor and its Significant Subsidiaries have been paid.

 

20.18               Solvency

 

20.18.1                Each Obligor, taken individually; and

 

20.18.2                the Original Guarantor and its Significant Subsidiaries, taken as a whole,

 

are, in each case, Solvent.

 

20.19               No default

 

No Event of Default is continuing or might reasonably be expected to result from the issuance of any Letter of Credit.

 

20.20               Deduction of Tax

 

It is not required under the laws of England and Wales, New York or Bermuda, to make any deduction for or on account of Tax from any payment it may make under any Finance Document.

 

20.21               No Filing or Stamp Taxes

 

Under the laws of England and Wales, New York or Bermuda, it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents save for:

 

20.21.1                filings in respect of any registerable security created under the Finance Documents and the payment of registration fees in connection therewith; and

 

20.21.2                any stock transfer taxes which may be payable upon the realisation or enforcement of all or any part of the Transaction Security.

 

20.22               Claims Pari Passu

 

Subject to the Legal Reservations, under the laws of Bermuda, the payment obligations under the Finance Documents of each member of the Group that is party to any Finance Document, rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

 

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20.23               No Winding-up

 

Neither it nor any of its Significant Subsidiaries has taken any corporate action nor have any other steps been taken or legal proceedings been started or (to the best of its knowledge and belief) threatened against any member of the Group for its winding-up, dissolution, administration or re-organisation (whether by voluntary arrangement, scheme of arrangement or otherwise) or for the appointment of a receiver, administrator, administrative receiver, conservator, custodian, Security Trustee or similar officer of it or of any or all of its assets or revenues.

 

20.24               Repetition of Representations

 

The Repeated Representations shall be deemed to be repeated by the relevant Obligor by reference to the facts and circumstances then existing on:

 

20.24.1                each Utilisation Date and every six months after such date until the Expiry Date of such Letter of Credit; and

 

20.24.2                in the case of an Additional Obligor, the day on which it becomes (or it is proposed that it becomes) an Additional Obligor,

 

and shall at such time be true in all material respects with the same effect as though such Repeated Representations had been made on such date (it being understood and agreed that any Repeated Representation which by its terms is made as of a specified date shall be required to be true in all material respects only as of such specified date and with respect to the representations and warranties set out in Clause 20.18 (Solvency), shall be tested by reference to the then most recent financial statements provided to the Agent pursuant to Clause 21.1 (Annual Financial Statements) and Clause 21.2 (Quarterly Financial Statements)) provided that when made by an Obligor on any date other than a Utilisation Date, the representations and warranties set out in Clause 20.3 (No Contravention of Agreements or Organisational Documents) shall not be deemed to be untrue in any material respect unless any contravention, conflict, inconsistency, breach, creation or imposition of Lien any Lien or violation (as the case may be) as set out therein, would reasonably be expected to have a Material Adverse Effect.

 

21.                           INFORMATION UNDERTAKINGS

 

21.1                     Annual Financial Statements

 

The Original Guarantor shall supply to the Agent (for distribution to the Lenders):

 

21.1.1                      as soon as available and in any event within 90 days after the close of each fiscal year of the Original Guarantor, the consolidated balance sheet of the Original Guarantor and its subsidiaries as at the end of such fiscal year and the related consolidated statements of income, changes in shareholders’ equity and cash flows of the Original Guarantor and its subsidiaries for such fiscal year, setting forth in comparative form the consolidated figures for the previous fiscal year, all in reasonable detail and accompanied by a report thereon of PricewaterhouseCoopers or another independent registered public accounting firm of recognised national standing selected by the Original Guarantor (without a “going concern” or like qualification and without any qualification or exception as to the scope of such audit), which report shall state that such

 

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consolidated financial statements present fairly in all material respects the consolidated financial position of the Original Guarantor and its subsidiaries as at the dates indicated and their consolidated results of operations and cash flows for the periods indicated in conformity with US GAAP and that the audit by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards. The Original Guarantor shall be deemed to have delivered the same to the Agent if the Original Guarantor files the same with the SEC via EDGAR and notifies the Agent of such filing; and

 

21.1.2                      as soon as the same becomes available and in any event within 120 days after the close of each of its financial year,  the audited financial statements of the Managed Syndicate for that financial year.

 

21.2                     Quarterly Financial Statements

 

The Original Guarantor shall supply to the Agent (for distribution to the Lenders), as soon as available and in any event within 60 days after the close of each of the first three quarterly accounting periods in each fiscal year of the Original Guarantor, consolidated balance sheets of the Original Guarantor and its subsidiaries as at the end of such period and the related consolidated statements of income, changes in shareholders’ equity and cash flows of the Original Guarantor and its subsidiaries for such period and (in the case of the second and third quarterly periods) for the period from the beginning of the current fiscal year to the end of such quarterly period, setting forth in each case in comparative form the consolidated figures for the corresponding periods of the previous fiscal year, all in reasonable detail and certified by the chief financial officer of the Original Guarantor as presenting fairly in all material respects, in accordance with US GAAP, the information contained therein, subject to changes resulting from normal year-end audit adjustments and the absence of full footnote disclosure. The Original Guarantor shall be deemed to have delivered the same to the Agent if the Original Guarantor files the same with the SEC via EDGAR and notifies the Agent of such filing.

 

21.3                     Officer’s Certificates

 

The Original Guarantor shall supply to the Agent (for distribution to the Lenders), at the time of the delivery of the financial statements provided for in Clause 21.1 (Annual Financial Statements) and Clause 21.2 (Quarterly Financial Statements), a certificate of a Financial Officer of the Original Guarantor:

 

21.3.1                      certifying that no Default or Event of Default has occurred or, if any Default or Event of Default has occurred, specifying the nature and extent thereof and any action taken or proposed to be taken with respect thereto;

 

21.3.2                      setting forth reasonably detailed calculations demonstrating compliance with the provisions of Clause 22 (Financial Condition), as at the end of such fiscal year or quarter, as the case may be;

 

21.3.3                      certifying that the Regulated Insurance Companies have, in the opinion of such Financial Officer maintained adequate reserves;

 

21.3.4                      stating whether any change in US GAAP or in the application thereof has

 

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occurred since 31 December 2006 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate; and

 

21.3.5                      it being agreed that a certificate in a form substantially similar to the Covenant Compliance Calculations delivered by the Original Guarantor under the Five-Year Secured Letter of Credit Facility with respect to the fiscal period ended 30 September 2007 (a copy of which has been provided to the Agent) is acceptable for purposes hereof.

 

21.4                     Quarterly Monitoring Return

 

The Original Guarantor shall as soon as the same become available but in any event within 90 days after the end of the fourth quarter and 60 days after the end of the first, second and third quarters of each financial year of the Managed Syndicate deliver to the Agent in sufficient copies for the Lenders, the Quarterly Monitoring Return for the Managed Syndicate.

 

21.5                     Accounting Firm Certificate

 

The Original Guarantor shall supply to the Agent (for distribution to the Lenders), at the time of the delivery of the financial statements provided for in Clause 21.1 (Annual Financial Statements) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any default under Clause 22.1 (Financial Condition) (which certificate may be limited to the extent required by general accounting rules or guidelines or the guidelines of the applicable accounting firm, to the extent generally applicable).

 

21.6                     Notice of Event of Default or Litigation

 

The Original Guarantor shall supply to the Agent (for distribution to the Lenders):

 

21.6.1                      promptly after any Obligor becomes aware of the occurrence of any Event of Default and/or any event or condition constituting, or which would reasonably be expected to have, a Material Adverse Effect, a certificate of an Authorised Officer of the Original Guarantor setting forth the details thereof and the actions which the Original Guarantor is taking or proposes to take with respect thereto; and

 

21.6.2                      promptly after any Obligor knows of the commencement thereof, notice of any litigation, dispute or proceeding involving a claim against the Original Guarantor and/or any of its subsidiaries which claim has had, or would reasonably be expected to have, a Material Adverse Effect.

 

21.7                     SEC Filings

 

Promptly upon the filing thereof and if requested by the Agent, copies of (or, to the extent same is publicly available via the SEC’s “EDGAR” filing system, written or electronic notification of the filing of) all publicly available registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and annual or quarterly reports which the Original Guarantor shall have filed with the SEC or any national securities exchange.

 

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21.8                     Borrowing Base Certificate

 

The Original Guarantor shall supply to the Agent (for distribution to the Lenders), no later than the tenth Business Day of each calendar month, a Borrowing Base Certificate as of the last day of the immediately preceding month, executed by an Authorised Signatory of the Original Guarantor.

 

21.9                     Release Test Calculations

 

The Original Borrower shall as soon as the same become available, but in any event within 30 days from the date of publication by Lloyd’s of the release test calculations (each, a “Publication Date”) in each calendar year, deliver to the Agent (for distribution to the Lenders) a copy of the release test calculations for the Corporate member published by Lloyd’s on or around such Publication Date (the “Release Test Calculations”).

 

21.10               Ratings Information

 

The Original Guarantor shall supply to the Agent (for distribution to the Lenders), promptly after A.M. Best Company, Inc. shall have announced a downgrade in the financial strength rating of Validus Reinsurance, Ltd., written notice of such rating change.

 

21.11               Other Information

 

The Original Guarantor shall supply to the Agent (for distribution to the Lenders), with reasonable promptness, such other information or existing documents (financial or otherwise) as the Agent or any Lender may reasonably request from time to time.

 

21.12               Delivery of Information

 

The Original Guarantor and each Lender hereby acknowledges and agrees that notwithstanding anything to the contrary contained in this Agreement, the Agent and/or any Obligor may make available to the Lenders materials and/or information provided by or on behalf of any Obligor or any other member of the Group that is party to a Finance Document under this Agreement or any other Finance Document by posting such materials and/or information on IntraLinks or another similar electronic system reasonably acceptable to the Agent and the Original Borrower.

 

21.13               Books, Records and Inspections

 

The Original Guarantor shall:

 

21.13.1                keep, and will cause each of its subsidiaries to keep, proper books of record and account in which full, true and correct entries in conformity with GAAP or SAP, as applicable, shall be made of all dealings and transactions in relation to its business and activities which GAAP or SAP, as applicable, requires to be entered therein; and

 

21.13.2                subject to binding contractual confidentiality obligations of the Obligors or their subsidiaries to third parties, to Clause 24.7 (Disclosure of Information) and to Clause 43 (Confidentiality), permit, and will cause each of its subsidiaries to permit, representatives of the Agent or, following the occurrence of an Event of Default which is continuing, any Lender (at such Agent or Lender’s expense prior to the occurrence of an Event of Default and at the Original Borrower’s

 

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expense (to the extent invoiced and reasonable) after an Event of Default has occurred and is continuing) to visit and inspect any of their respective properties, to examine their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants, in each case at such reasonable times (which shall be, unless an Event of Default has occurred and is continuing, during business hours, upon reasonable prior notice to the Agent, which notice shall be promptly conveyed to the Original Guarantor) and as often as may reasonably be desired provided  that unless a Default or Event of Default has occurred which is continuing, such visits and inspections shall not occur more than once in any calendar year. Each Obligor agrees to (and the Original Guarantor shall ensure that each other member of the Group that is party to a Finance Document shall) cooperate and assist in such visits and inspections. With respect to any such discussions with any independent public accountants of the Original Guarantor or its subsidiaries, the Original Guarantor shall be granted the opportunity to participate therein.

 

21.14               “Know your customer” checks

 

21.14.1                If:

 

(a)                     the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

 

(b)                    any change in the status of an Obligor or any other member of the Group that is party to a Finance Document  or the composition of the shareholders of an Obligor or any other member of the Group that is party to a Finance Document  after the date of this Agreement; or

 

(c)                     a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

 

obliges the Agent or any Lender (or, in the case of paragraph (c) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall (and, where relevant, shall procure that each other member of the Group that is party to a Finance Document will) promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph (c) above, on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in paragraph (c) above, any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

 

21.14.2                Each Lender shall promptly upon the request of the Agent supply, or procure

 

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the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

 

21.14.3                The Original Guarantor shall, by not less than 10 Business Days’ prior written notice to the Agent, notify the Agent (which shall promptly notify the Lenders) of its intention to request that one of its Subsidiaries becomes an Additional Obligor pursuant to Clause 26 (Changes to the Obligors).

 

21.14.4                Following the giving of any notice pursuant to sub-clause 21.14.3 above, if the accession of such Additional Obligor obliges the Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Original Guarantor shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Agent or such Lender or any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the accession of such subsidiary to this Agreement as an Additional Obligor.

 

22.                           FINANCIAL CONDITION

 

22.1                     Financial Condition

 

The Original Guarantor shall not at any time permit:

 

22.1.1                      the Leverage Ratio to be greater than 0.35:1.00; and

 

22.1.2                      the Consolidated Net Worth to be less than the Minimum Consolidated Net Worth Amount in effect at such time.

 

22.2                     Financial Definitions

 

In this Agreement, the following terms have the following meanings:

 

“Capital Lease Obligations” of any person means 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 the amount of such obligations shall be the capitalised amount thereof determined in accordance with US GAAP.

 

“Consolidated Indebtedness” means, as of any date of determination, all Indebtedness (other than (a) Indebtedness described in paragraph (i) of the definition thereof that does not constitute bonds, debentures, notes or similar instruments that are generally recourse with respect to the Original Guarantor and its subsidiaries, (b) obligations in respect of undrawn letters of credit and (c) Indebtedness that is non-recourse with respect to the Original Guarantor and its subsidiaries) of the Original Guarantor and its subsidiaries.

 

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For the avoidance of doubt, “Consolidated Indebtedness” shall not include contingent obligations of the Original Guarantor or any subsidiary as an account party or applicant in respect of any letter of credit or Guarantee unless such letter of credit or Guarantee supports an obligation that constitutes Indebtedness.

 

“Consolidated Net Worth” means, as of any date of determination, the Net Worth of the Original Guarantor and its subsidiaries determined on a consolidated basis in accordance with US GAAP after appropriate deduction for any minority interests in subsidiaries including for the avoidance of doubt the aggregate principal amount of all outstanding preferred (including without limitation trust preferred) or preference securities or Hybrid Capital of the Original Guarantor and its subsidiaries provided that the aggregate outstanding amount of such preferred or preference securities or Hybrid Capital of the Original Guarantor and its subsidiaries shall only be included in Consolidated Net Worth to the extent such amount would be included in a determination of the consolidated net worth of the Original Guarantor and its subsidiaries under the applicable procedures and guidelines of S&P as of the date of this Agreement.

 

“Consolidated Total Capital” means, as of any date of determination, the sum of (a) Consolidated Indebtedness and (b) Consolidated Net Worth at such time.

 

“Fronting Arrangement” means an agreement or other arrangement by a Regulated Insurance Company pursuant to which an insurer or insurers agree to issue insurance policies at the request or on behalf of such Regulated Insurance Company and such Regulated Insurance Company assumes the obligations in respect thereof pursuant a Reinsurance Agreement or otherwise.

 

“Guarantee” of or by any person (the “guarantor”) means any obligation guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of such person, whether or not contingent:

 

(a)                                      to purchase any such primary obligation or any property constituting direct or indirect security therefor;

 

(b)                                     to advance or supply funds:

 

(i)                        for the purchase or payment of any such primary obligation; 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;

 

(c)                                      to purchase or lease property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation; or

 

(d)                                     otherwise to assure or hold harmless the owner of such primary obligation against loss in respect thereof,

 

provided that the term “Guarantee” shall not include (i) endorsements of instruments for

 

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deposit or collection in the ordinary course of business and (ii) obligations of any Regulated Insurance Company under Insurance Contracts, Reinsurance Agreements, Fronting Arrangements or Retrocession Agreements (including any Liens with respect thereto). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith.

 

“Hybrid Capital” means any security that affords equity benefit to the issuer thereof (under the procedures and guidelines of the S&P) by having ongoing payment requirements that are more flexible than interest payments associated with conventional indebtedness for borrowed money and by being contractually subordinated to such indebtedness. For the avoidance of doubt, the Original Guarantor’s Junior Subordinated Deferrable Debentures constitute Hybrid Capital.

 

“Insurance Contract” means any insurance contract or policy issued by a Regulated Insurance Company but shall not include any Reinsurance Agreement, Fronting Arrangement or Retrocession Agreement.

 

“Junior Subordinated Deferrable Debentures” mean the Original Guarantor’s Junior Subordinated Deferrable Interest Debentures due 2036 issued under the Junior Subordinated Indenture dated as of 15 June 2006 between the Original Guarantor and JPMorgan Chase Bank, National Association as trustee, as the same has been and may be amended from time to time, and any substantially similarly structured security issued by the Original Guarantor or any of its subsidiaries, including for the avoidance of doubt the Original Guarantor’s Junior Subordinated Deferrable Interest Debentures due 2037 issued under the Junior Subordinated Indenture dated 21 June 2007 between the Original Guarantor and Wilmington Trust Company, as Trustee, as the same may be amended from time to time.

 

“Leverage Ratio” means the ratio of (i) Consolidated Indebtedness to (ii) Consolidated Total Capital.

 

“Minimum Consolidated Net Worth Amount” shall mean, at any time, an amount which initially shall be equal to $2,589,615,000, which amount shall be increased immediately following the last day of each financial quarter (commencing with the fiscal quarter ending on 30 September 2011) by (i) an amount (if positive) equal to 50% of the Net Income for such financial quarter plus (ii) 50% of the net cash proceeds received from any issuance of shares of common stock of the Original Guarantor during such financial quarter.

 

“Net Income” shall mean, for any period, an amount equal to the net income of the Original Guarantor and its subsidiaries (determined on a consolidated basis in accordance with US GAAP) for such period.

 

“Reinsurance Agreement” means any agreement, contract, treaty, certificate or other arrangement whereby any Regulated Insurance Company agrees to transfer, cede or retrocede to another insurer or reinsurer all or part of the liability assumed or assets held

 

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by such Regulated Insurance Company under a policy or policies of insurance issued by such Regulated Insurance Company or under a reinsurance agreement assumed by such Regulated Insurance Company.

 

“Retrocession Agreement” means any agreement, contract, treaty or other arrangement whereby one or more insurers or reinsurers, as retrocessionaires, assume liabilities of reinsurers under a Reinsurance Agreement or other retrocessionaires under another Retrocession Agreement.

 

22.3                     Financial Testing

 

The financial covenants set out in this Clause 22 shall be tested by reference to each of the annual audited or quarterly financial statements and/or each officer’s certificate delivered pursuant to Clause 21.3 (Officer’s Certificates).

 

22.4                     Accounting Terms

 

All accounting expressions which are not otherwise defined herein shall be construed in accordance with US GAAP or UK GAAP, as applicable, it being understood that insofar as any test or covenant applies to the Original Guarantor and its subsidiaries on a consolidated basis, such accounting expressions shall be construed in accordance with US GAAP.

 

23.                           GENERAL UNDERTAKINGS

 

23.1                     Insurance

 

The Original Guarantor will maintain, and will cause each of its subsidiaries to maintain (either in the name of the Original Guarantor or in the subsidiary’s own name) with financially sound and reputable insurance companies, insurance on their property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies of established repute engaged in the same or similar businesses.

 

23.2                     Payment of Taxes and other Obligations

 

Except where the failure to do so would not reasonably be expected, individually or in aggregate, to have a Material Adverse Effect, the Original Guarantor will pay and discharge, and will cause each of its subsidiaries to pay and discharge:

 

23.2.1                      all material income taxes and all other material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it; and

 

23.2.2                      all other material lawful claims, in each case, on a timely basis prior to the date on which penalties attach thereto; provided that neither the Original Guarantor nor any of its subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with applicable GAAP.

 

23.3                     Maintenance of Existence; Conduct of Business

 

23.3.1                      The Original Guarantor shall maintain, and shall cause each of its subsidiaries to maintain, its existence and the rights, licenses, permits, privileges, franchises,

 

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patents, copyrights, trademarks and trade names material to the conduct of its business, provided that the Original Guarantor shall not be required to maintain the existence of any of its subsidiaries or any such rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names:

 

(a)                     if the Original Guarantor shall determine in good faith that the preservation thereof is no longer desirable in the conduct of the business of the Original Guarantor and its subsidiaries, taken as a whole; or

 

(b)                    in connection with a Disposition permitted by Clause 23.13 (Consolidations, Mergers and Sales of Assets).

 

23.3.2                      The Original Guarantor will qualify and remain qualified, and cause each of its subsidiaries to qualify and remain qualified, as a foreign corporation in each jurisdiction where the Original Guarantor or such subsidiary, as the case may be, is required to be qualified, except in those jurisdictions in which the failure to receive or retain such qualifications, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

23.4                     Compliance with Statutes, etc.

 

The Original Guarantor will, and will cause each subsidiary to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls) other than those the non-compliance with which, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

23.5                     ERISA

 

Promptly after the occurrence of any of the events or conditions specified below with respect to any Plan or Multiemployer Plan, the Original Guarantor will furnish to the Agent (for distribution to the Lenders), a certificate of an Authorised Signatory of the Original Guarantor setting forth details respecting such event or condition and the action if any, that the Original Guarantor or the applicable ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to the PBGC or an applicable foreign governmental agency by the Original Guarantor or such ERISA Affiliate with respect to such event or condition).  The events or conditions are:

 

23.5.1                      any reportable event, as defined in subsections (c)(1), (2), (5) and (6), and subsection (d)(2) of Section 4043 of ERISA and the regulations issued thereunder, with respect to a Plan;

 

23.5.2                      the filing under Section 4041(c) of ERISA of a notice of intent to terminate any Plan under a distress termination or the distress termination of any Plan;

 

23.5.3                      the institution by the PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the

 

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receipt by the Original Guarantor or any of its ERISA Affiliates of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan which would reasonably be expected to result in a liability to the Original Guarantor or any of its subsidiaries in excess of $15,000,000;

 

23.5.4                      the receipt by the Original Guarantor or any of its ERISA Affiliates of notice from a Multiemployer Plan that the Original Guarantor or any of its ERISA Affiliates has incurred withdrawal liability under Section 4201 of ERISA in excess of $15,000,000 or that such Multiemployer Plan is in reorganisation or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA whereby a deficiency or additional assessment is levied or threatened to be levied in excess of $15,000,000 against the Original Guarantor or any of its ERISA Affiliates;

 

23.5.5                      the institution of a proceeding by a fiduciary of any Plan or Multiemployer Plan against the Original Guarantor or any of its ERISA Affiliates to enforce Section 515 or 4219(c)(5) of ERISA asserting liability in excess of $15,000,000, which proceeding is not dismissed within 30 days; and

 

23.5.6                      that any contribution in excess of $15,000,000 required to be made with respect to a Foreign Pension Plan has not been timely made, or that the Original Guarantor or any of its subsidiaries may incur any liability in excess of $15,000,000 pursuant to any Foreign Pension Plan (other than to make contributions in the ordinary course of business).

 

23.6                     Maintenance of Property

 

The Original Guarantor shall, and shall cause each of its subsidiaries to, maintain all of their properties and assets in good condition, repair and working order, ordinary wear and tear excepted, except where failure to maintain the same, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

23.7                     Maintenance of Licenses and Permits

 

The Original Guarantor shall, and shall cause each of its subsidiaries to, maintain all permits, licenses and consents as may be required for the conduct of its business by any state, federal or local government agency or instrumentality, except where failure to maintain the same, either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

23.8                     Collateral; Further Assurances

 

The Original Guarantor shall promptly and duly execute and deliver to the Agent such documents and assurances and take such further action as the Agent may from time to time reasonably request in order to carry out more effectively the intent and purpose of the Finance Documents and to establish, protect and perfect the rights and remedies created or intended to be created in favour of the Finance Parties pursuant to the Finance Documents.

 

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23.9                     Substitution of Letters of Credit

 

Upon any Lender assigning or transferring the whole or any part of its Commitment in accordance with Clause 25 (Changes to the Lenders) each Borrower shall use all commercially reasonable endeavours to procure that Lloyd’s accepts a new Letter of Credit issued by the new Lenders party to that Letter of Credit in replacement for the original Letter of Credit requested by it and such original Letter of Credit is returned to the Agent.

 

23.10               Application of Funds at Lloyd’s and Cash Calls

 

The Managing Agent shall, before applying the Funds at Lloyd’s of that Account Party in the payment of any claims, expenses or outgoings made or incurred in connection with its underwriting business, make a request for funds of the Account Party in its capacity as a member of the Managed Syndicate.

 

23.11               Funds at Lloyd’s compliance

 

Each Obligor shall:

 

23.11.1                ensure the Own FAL of the Account Party shall consist of acceptable assets (as such phrase is defined in paragraph 8 of the Membership and Underwriting Conditions and requirements (Funds at Lloyd’s));

 

23.11.2                ensure that its Own FAL shall be revalued by Lloyd’s in accordance with Lloyd’s usual practice on 31 December in each year and on each of the Publication Dates referred to in Clause 21.9 (Release Test Calculations); and

 

23.11.3                ensure that, subject to any claims or losses of the Account Party arising on or after the date of this Agreement in the ordinary course of its insurance business, Own FAL of the Account Party shall not at any time be less than $300,000,000.

 

23.12               Changes in Business or Organisational Documents

 

The Original Guarantor shall not, and shall ensure that none of its subsidiaries will, engage (directly or indirectly) in any business other than:

 

23.12.1                businesses in which they are engaged (or proposed to be engaged) as of the date of this Agreement and reasonable extensions thereof;

 

23.12.2                other specialty insurance and structured risk insurance and reinsurance product lines; and

 

23.12.3                any other businesses that are complementary or reasonably related thereto and the conduct of business incidental thereto.

 

23.13               Consolidations, Mergers and Sales of Assets

 

23.13.1                The Original Guarantor shall not, and shall ensure that none of its subsidiaries will, consolidate or merge with or into any other person, or permit any other person to merge into or consolidate with it; provided that:

 

(a)                     the Original Guarantor may merge with another person, if:

 

(i)                       the Original Guarantor is the entity surviving such merger; and

 

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(ii)      immediately after giving effect to such merger, no Default or Event of Default shall have occurred and be continuing;

 

(b)       any subsidiary of the Original Guarantor may merge with another person, if:

 

(i)       such subsidiary is the entity surviving (or, in the case of an amalgamation, continues immediately following) such merger; and

 

(ii)      immediately after giving effect to such merger, no Default or Event of Default shall have occurred and be continuing;

 

(c)       Wholly-Owned Subsidiaries of the Original Guarantor may merge with one another; and

 

(d)       Transatlantic may merge with or into a Wholly-Owned Subsidiary of the Original Guarantor pursuant to the General Corporation Law of the State of Delaware, as amended.

 

23.13.2     In addition, the Original Guarantor shall not, and shall ensure that none of its subsidiaries will, sell, convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily or involuntarily, any of its properties or assets, tangible or intangible (each, a “Disposition”), except:

 

(a)       Dispositions in the ordinary course of its business;

 

(b)       such Dispositions by:

 

(i)       the Original Guarantor or any of its subsidiaries of any of their respective properties or assets to the Original Guarantor or any Wholly-Owned Subsidiary of the Original Guarantor;

 

(ii)      IPC or any of its subsidiaries of any of their respective properties or assets to IPC or any of its other subsidiaries;

 

(iii)     Transatlantic or any of its subsidiaries of any of their respective properties or assets to Transatlantic or any of its other subsidiaries;

 

(c)       subject to Clause 23.3 (Maintenance of Existence; Conduct of Business), the dissolution or winding up of any subsidiary other than an Obligor or the Account Party;

 

(d)       Dispositions of used, worn out, obsolete or surplus property of the Original Guarantor or any subsidiary in the ordinary course of business;

 

(e)       licenses (as licensor) of intellectual property so long as such licenses do not materially interfere with the business of the Original Guarantor or any of its subsidiaries;

 

(f)        Dispositions of Cash, Cash Equivalents and investment securities (including pursuant to any securities lending arrangements permitted by sub-clause 23.14.21 of Clause 23.14 (Liens) and including in connection 

 

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with the posting of collateral in connection with this Agreement or in connection with the Five-Year Secured Letter of Credit Facility, the Three-Year Unsecured Letter of Credit Facility, the Citi Facility or the IPC Facilities);

 

(g)       releases, surrenders or waivers of contracts, torts or other claims of any kind as a result of the settlement of any litigation or threatened litigation;

 

(h)       the granting or existence of Liens permitted under this Agreement;

 

(i)        leases or subleases of real property so long as such leases or subleases do not materially interfere with the business of the Original Guarantor or any of its subsidiaries;

 

(j)        Dividends permitted under Clause 23.19 (Restricted Payments);

 

(k)       ceding of insurance or reinsurance in the ordinary course of business; and

 

(l)       other Dispositions of assets with a fair market value which in the aggregate do not exceed 10 per cent. of the lesser of the book or fair market value of the property and assets of the Original Guarantor determined on a consolidated basis as of the last day of the previous financial year of the Original Guarantor provided that immediately after giving effect (including pro forma effect) to any Disposition made pursuant to this sub-paragraph (l), no Event of Default shall have occurred and be continuing,

 

provided that for the avoidance of doubt, Dispositions of Collateral shall only be made to the extent permitted under Sections 4.04 or 4.05 of the Security Agreement and nothing in this Clause 23.13.2 shall serve as a waiver or modification of the requirements under Clause 9 (Collateralisation of Letters of Credit).

 

23.14     Liens

 

The Original Guarantor shall not, and shall ensure that none of its subsidiaries will, permit, create, assume, incur or suffer to exist any Lien on any asset tangible or intangible now owned or hereafter acquired by it, except:

 

23.14.1     Liens existing on the date of this Agreement and listed in Schedule 11 (Existing Liens) hereto, including any amendment or variation thereof (except to the extent that such amendment or variation results in an increase of the principal amount secured by such Lien);

 

23.14.2     Liens securing repurchase agreements constituting a borrowing of funds by the Original Guarantor or any subsidiary of the Original Guarantor in the ordinary course of business for liquidity purposes and in no event for a period exceeding 90 days in each case;

 

23.14.3     Liens arising pursuant to purchase money mortgages, capital leases or security interests securing Indebtedness representing the purchase price (or financing of 

 

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the purchase price within 90 days after the respective purchase) of assets acquired by any Obligor or any of its subsidiaries;

 

23.14.4     Liens on any asset of any person existing at the time such person is merged or consolidated with or into, or otherwise acquired by, the Original Guarantor or any of its subsidiaries or becomes a member of the Group or at the time of acquisition of such asset by the Original Guarantor or any of its subsidiaries and not created in contemplation of such event;

 

23.14.5     Liens securing obligations owed by the Original Guarantor to any of its subsidiaries or owed by any subsidiary of the Original Guarantor to the Original Guarantor or any other subsidiary of the Original Guarantor, in each case solely to the extent that such Liens are required by an Applicable Insurance Regulatory Authority for such person to maintain such obligations;

 

23.14.6     Liens securing insurance or reinsurance obligations of subsidiaries of the Original Guarantor owed by such subsidiary to the Original Guarantor or any other subsidiary of the Original Guarantor, in each case solely to the extent that such Liens are required or requested by rating agencies, regulatory agencies, clients or brokers for such person to maintain such insurance and reinsurance obligations;

 

23.14.7     Liens on investments and cash balances of any Regulated Insurance Company securing obligations of such Regulated Insurance Company in respect of trust or similar arrangements formed, letters of credit issued or funds withheld balances established, in each case, in the ordinary course of business for the benefit of policyholders or cedents to secure insurance or reinsurance recoverables owed to them by such Regulated Insurance Company;

 

23.14.8     inchoate Liens for taxes, assessments or governmental charges or levies not yet due or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with applicable GAAP;

 

23.14.9     Liens in respect of property or assets of the Original Guarantor or any of its subsidiaries imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens and other similar Liens arising in the ordinary course of business, and:

 

(a)       which do not in the aggregate materially detract from the value of the Original Guarantor or such subsidiary’s property or assets or materially impair the use thereof in the operation of the business of the Original Guarantor or such subsidiary; or

 

(b)       which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to any such Lien;

 

23.14.10   licenses, sublicenses, leases, or subleases granted to other persons not materially 

 

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interfering with the conduct of the business of the Original Guarantor or any of its subsidiaries;

 

23.14.11   easements, rights-of-way, restrictions, encroachments and other similar charges or encumbrances, and minor title deficiencies, in each case not securing Indebtedness and not materially interfering with the conduct of the business of the Original Guarantor or any of its subsidiaries;

 

23.14.12   Liens arising out of the existence of judgments or awards not constituting an Event of Default under Clause 24.7 (Judgments);

 

23.14.13   Liens (other than Liens imposed under ERISA) incurred in the ordinary course of business in connection with workers compensation claims, unemployment insurance and social security benefits and Liens securing the performance of bids, reinsurance obligations, tenders, leases and contracts in the ordinary course of business, statutory obligations, surety bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business and consistent with past practice (exclusive of obligations in respect of payment for borrowed money);

 

23.14.14   bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to Cash and Cash Equivalents on deposit in one or more accounts maintained by the Original Guarantor or any of its subsidiaries, in each case granted in the ordinary course of business in favour of the bank or banks with which such accounts are maintained;

 

23.14.15   Liens arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien permitted by any of the clauses of this Clause 23.14 (Liens), provided that such Indebtedness is not increased and is not secured by any additional assets;

 

23.14.16   Liens created pursuant to the Finance Documents, Liens created pursuant to the Five-Year Secured Letter of Credit Facility or the Three-Year Unsecured Letter of Credit Facility, Liens created pursuant to the Citi Facility and Liens created pursuant to the IPC Facilities;

 

23.14.17   Liens in respect of property or assets of any subsidiary of the Original Guarantor securing Indebtedness of the type described in paragraph (e) of the definition of “Permitted Subsidiary Indebtedness”;

 

23.14.18   Liens in respect of property or assets of any subsidiary of the Original Guarantor securing Indebtedness of the type described in paragraph (i) of the definition of “Permitted Subsidiary Indebtedness” provided that:

 

(a)       the aggregate amount of such Liens (measured, as to each such Lien permitted under this sub-clause 23.14.18, as the greater of the amount secured by such Lien and the fair market value at such time of the assets subject to such Lien) shall not, when added to the aggregate amount of all Liens (measured as set forth in this sub-clause 23.14.18) incurred pursuant to sub-clause 23.14.26 and the aggregate amount of outstanding unsecured 

 

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Indebtedness of subsidiaries incurred pursuant to paragraph (i) of the definition of “Permitted Subsidiary Indebtedness”, exceed at any time 5 per cent. of Consolidated Net Worth at the time of incurrence of any new Liens under this sub-clause 23.14.18; and

 

(b)       immediately after giving effect to the incurrence of any Lien pursuant to this sub-clause 23.14.18, no Event of Default shall have occurred and be continuing;

 

23.14.19   Liens on assets received by or of the Original Guarantor or its subsidiaries and held in trust in respect of, or deposited or segregated to secure, liabilities assumed in the course of the reinsurance business or under any Insurance Contracts, Reinsurance Agreements, Fronting Arrangements or other indemnity arrangements entered in the ordinary course of business, Liens on assets held in any Lloyd’s Trust Fund and/or Liens on assets held in any insurance brokering account;

 

23.14.20   Liens not securing indebtedness for borrowed money on Cash and securities arising in the ordinary course of business in connection with the structured risk insurance and reinsurance product lines of the Original Guarantor or its subsidiaries;

 

23.14.21   Liens arising in connection with securities lending arrangements entered into by the Original Guarantor or any of its subsidiaries with financial institutions in the ordinary course of business so long as any securities subject to any such securities lending arrangement do not constitute Collateral;

 

23.14.22   any title transfer or retention of title arrangement entered into by any member of the Group in the normal course of its trading activities on the counterparty’s standard or usual terms;

 

23.14.23   any Lien over or affecting any asset forming part of a trust fund (or whose proceeds will form part of a trust fund) which is held subject to the provisions of any deed or agreement of the kind referred to in sub-clause 23.14.24 below, where such Lien is created to secure obligations arising under a Syndicate Arrangement;

 

23.14.24   any Lien granted or subsisting under any deed or agreement required by Lloyd’s to be executed or entered into by or on behalf of a member of the Group in connection with its insurance business at Lloyd’s;

 

23.14.25   Liens pursuant to any agreement entered into from time to time between the Managing Agent and any custodian and any investment manager of or in respect of the syndicate’s assets; and

 

23.14.26   without duplication of the Liens described in sub-clauses 23.14.1 through 23.14.25 above, additional Liens securing obligations of the Original Guarantor or its subsidiaries provided that:

 

(a)       the aggregate amount of such Liens (measured, as to each such Lien

 

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permitted under this sub-clause 23.14.26, as the greater of the amount secured by such Lien and the fair market value at such time of the assets subject to such Lien) shall not, when added to the aggregate amount of all Liens (measured as set forth in this sub-clause 23.14.26, above) incurred pursuant to sub-clause 23.14.18 and the aggregate amount of outstanding unsecured Indebtedness of subsidiaries of the Original Guarantor incurred pursuant to paragraph (i) of the definition of “Permitted Subsidiary Indebtedness”, exceed at any time 5 per cent. of Consolidated Net Worth at the time of incurrence of any new Liens under this sub-clause 23.14.26; and

 

(b)       immediately after giving effect to the incurrence of any Lien pursuant to this sub-clause 23.14.26, no Event of Default shall have occurred and be continuing.

 

23.15     Indebtedness

 

23.15.1     The Original Guarantor shall not create, incur, assume or permit to exist any Indebtedness, or agree, become or remain liable (contingent or otherwise) to do any of the foregoing, except for the Indebtedness under the Finance Documents, Indebtedness under the Five-Year Secured Letter of Credit Facility, Indebtedness under the Three-Year Unsecured Letter of Credit Facility, Indebtedness under the Citi Facility, Indebtedness under the IPC Facilities and other Indebtedness which either ranks pari passu with, or subordinate in right of payment to, any such Indebtedness (it being understood that unsecured Indebtedness is not subordinate to secured Indebtedness solely because it is unsecured, and Indebtedness that is not guaranteed by a particular person is not deemed to be subordinate to Indebtedness that is so guaranteed solely because it is not so guaranteed).

 

23.15.2     The Original Guarantor shall ensure that none of its subsidiaries will create, incur, assume or permit to exist any Indebtedness, or agree, become or remain liable (contingent or otherwise) to do any of the foregoing, except for Permitted Subsidiary Indebtedness.

 

23.16     Sale and Lease-Back Transactions

 

The Original Guarantor shall not, and shall ensure that none of its subsidiaries will, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, except for any such sale of any fixed or capital assets by the Original Guarantor or any subsidiary that is made for cash consideration in an amount not less than the fair value of such fixed or capital asset and is consummated within 90 days after the Original Guarantor or any subsidiary acquires or completes the construction of such fixed or capital asset, provided that, if such sale and leaseback results in a Capital Lease Obligation, such Capital Lease Obligation is permitted by Clause 23.15 (Indebtedness) and any Lien made the subject of such Capital Lease Obligation is permitted by Clause 23.14 (Liens); provided, that this Clause 23.16 shall not prohibit Capital Markets Products entered into in the ordinary 

 

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course of business and not for speculative purposes.

 

23.17     Issuance of Stock

 

The Original Guarantor shall not, and shall ensure that none of its subsidiaries will, directly or indirectly issue, sell, assign, pledge, or otherwise encumber or dispose of any shares of its preferred or preference equity securities or options to acquire preferred or preference equity securities, except the issuance of preferred (including trust preferred) or preference equity securities or Hybrid Capital, so long as:

 

23.17.1     either:

 

(a)       no part of such preferred or preference equity securities or Hybrid Capital is mandatorily redeemable (whether on a scheduled basis or as a result of the occurrence of any event or circumstance) prior to the date occurring six months after 31 December 2016; or

 

(b)       all such preferred or preference equity securities or Hybrid Capital or options therefor are issued to and held by the Original Guarantor or its Wholly-Owned Subsidiaries; and

 

23.17.2     such preferred or preference equity securities or Hybrid Capital do not contain any financial performance related covenants or incurrence covenants which restrict the operations of the issuer thereof,

 

provided that such preferred or preference securities or Hybrid Capital may contain financial performance related covenants or incurrence covenants which are no more restrictive (taken as a whole) than the terms, provisions and covenants contained herein (taken as a whole). For the avoidance of doubt, this Clause 23.17 does not relate to ordinary or common equity or options relating thereto.

 

23.18     Dissolution

 

No Obligor shall suffer or permit its dissolution or liquidation either in whole or in part, except through a corporate reorganisation to the extent permitted by Clause 23.13 (Consolidations, Mergers and Sales of Assets).

 

23.19     Restricted Payments

 

23.19.1     The Original Guarantor shall not declare or pay any dividends, purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Interests now or hereafter outstanding, return any capital to its stockholders, partners or members (or the equivalent persons thereof) as such, make any distribution of assets, Equity Interests, obligations or securities to its stockholders, partners or members (or the equivalent persons thereof) as such, or permit any of its subsidiaries to purchase, redeem, retire, defease or otherwise acquire for value any Equity Interests in the Original Guarantor or to sell any Equity Interests therein (each of the foregoing a “Dividend” and, collectively, “Dividends”) provided that this Clause 23.19 shall not prohibit Dividends so long as before and after giving effect (including pro forma effect) thereto, no Default or Event of Default shall have occurred and be continuing.

 

23.19.2     Notwithstanding sub-clause 23.19.1 above, the Original Guarantor may declare 

 

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and pay cash dividends or distributions in respect of:

 

(a)       any trust preferred security, deferrable interest subordinated debt security, mandatory convertible debt or other hybrid security (including Hybrid Capital) that, at the time of issuance thereof or at any time prior to the initial dividend or distribution thereunder, was accorded equity treatment by S&P; and/or

 

(b)       any Preferred Security,

 

if, at the time of and after giving pro forma effect to such dividend or distribution, no Event of Default under Clause 24.1 (Failure to Pay), sub-clause 24.4.1 of Clause 24.4 (Default under other Agreements) or Clause 24.5 (Bankruptcy, etc) shall have occurred and be continuing.

 

23.20     Transactions with Affiliates

 

Neither the Original Guarantor nor any of its subsidiaries shall enter into or be a party to, a transaction with any Affiliate of the Original Guarantor or such subsidiary (which Affiliate is not the Original Guarantor or a subsidiary thereof) involving aggregate payments or consideration (with respect to any single or series of related transactions) in excess of $1,000,000, except:

 

23.20.1     transactions with Affiliates on terms not materially less favourable to the Original Guarantor or such subsidiary than those that could have been obtained in a comparable transaction on an arm’s length basis from an unrelated person;

 

23.20.2     Dividends not prohibited by Clause 23.19 (Restricted Payments);

 

23.20.3     fees and compensation paid to and indemnities provided on behalf of officers and directors of the Original Guarantor or any of its subsidiaries as reasonably determined in good faith by the board of directors, the audit committee or senior management of the Original Guarantor; and

 

23.20.4     any Existing Affiliate Transaction and amendments thereto that are not materially adverse to the Lenders, as reasonably determined by the board of directors of the Original Guarantor, a duly authorised committee thereof or an authorised officer of the Original Guarantor.

 

23.21     Limitation on Certain Restrictions on subsidiaries

 

The Original Guarantor shall not, and shall ensure that none of its subsidiaries will, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such subsidiary to:

 

23.21.1     pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits owned by the Original Guarantor or any of its subsidiaries, or pay any Indebtedness owed to the Original Guarantor or any of its subsidiaries;

 

23.21.2     make loans or advances to the Original Guarantor or any of its subsidiaries; or

 

23.21.3     transfer any of its properties or assets to the Original Guarantor or any of its 

 

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subsidiaries, 

 

except for such encumbrances or restrictions existing under or by reason of:

 

(a)       applicable Legal Requirements, including any Applicable Insurance Regulatory Authority;

 

(b)       this Agreement and the other Finance Documents;

 

(c)       customary provisions restricting subletting or assignment of any lease governing any leasehold interest of the Original Guarantor or any of its subsidiaries;

 

(d)       customary provisions restricting assignment of any licensing agreement (in which the Original Guarantor or any of its subsidiaries is the licensee) or other contract (including leases) entered into by the Original Guarantor or any of its subsidiaries in the ordinary course of business;

 

(e)       restrictions on the transfer of any asset pending the close of the sale of such asset;

 

(f)        restrictions on the transfer of any asset as a result of a Lien permitted by Clause 23.14 (Liens);

 

(g)       agreements entered into by a Regulated Insurance Company with an Applicable Insurance Regulatory Authority or ratings agency in the ordinary course of business;

 

(h)       customary provisions in partnership agreements, limited liability company organisational governance documents, joint venture agreements and other similar agreements entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company, joint venture or similar person;

 

(i)        restrictions on Cash or other deposits or net worth imposed by customers under contracts (including Insurance Contracts, Fronting Arrangements and Reinsurance Agreements) entered into in the ordinary course of business, pursuant to an agreement or instrument relating to any Permitted Subsidiary Indebtedness of the type described in paragraph (d) of the definition thereof if the encumbrances and restrictions contained in any such agreement or instrument taken as a whole are not materially less favourable to the Finance Parties than the encumbrances and restrictions contained in the Finance Documents;

 

(j)        any encumbrances or restrictions imposed by any amendments or refinancings of the contracts, instruments or obligations referred to in paragraph (i) above provided that such amendments or refinancings are no more materially restrictive with respect to such encumbrances and restrictions than those prior to such amendment or refinancing;

 

(k)       restrictions placed in accordance with the Segregated Account Companies 

 

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Act 2000 of Bermuda on the transfer of any asset held, carried or deposited in a segregated account of a Protected Cell Company;

 

(l)        restrictions contained in the Five-Year Secured Letter of Credit Facility, restrictions contained in the Three-Year Unsecured Letter of Credit Facility, restrictions contained in the Citi Facility, restrictions contained in the IPC Facilities, restrictions contained in any Merger Financing and restrictions contained in any other indebtedness permitted to be incurred by subsidiaries of the Original Guarantor hereunder so long as such restrictions are no more restrictive, taken as a whole, than the comparable restrictions and conditions set forth in this Agreement, as determined in the good faith judgment of the board of directors of the Original Guarantor;

 

(m)      agreements and arrangements listed in Schedule 12 (Existing Intercompany Agreements and Arrangements); and

 

(n)       agreements or arrangements in respect of:

 

(i)        assets held in trust in any Lloyd’s Trust Fund;

 

(ii)       assets held in any insurance brokering account; and/or

 

(iii)      assets held in trust for the benefit of an insured party pursuant to an insurance or reinsurance arrangement entered into in the ordinary course of business.

 

23.22     Private Act

 

No Obligor will become subject to a Private Act.

 

23.23     End of Financial Years; Financial Quarters

 

The Original Guarantor will cause:

 

23.23.1     each of its, and each of its material subsidiaries’, financial years to end on December 31 of each year; and

 

23.23.2     each of its, and each of its material subsidiaries’, financial quarters to end on dates which are consistent with a financial year end as described above.

 

23.24     Condition subsequent

 

The Original Borrower shall, as soon as reasonably practicable but in any event within 5 Business Days from the date on which it becomes available, deliver to the Agent a copy of the next monthly valuation report produced by Lloyd’s following the date of the Amendment Agreement, evidencing that the value of the Own FAL of the Account Party is no less than $300,000,000.

 

23.25     Consummation of Second-Step Merger

 

In the event that any privately-negotiated or open market purchase, tender offer, exchange offer, merger, consolidation, share swap or other transaction results in the Original Guarantor owning less than all but more than a majority of the outstanding shares of common stock of Transatlantic, the Original Guarantor shall use commercially 

 

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reasonable efforts to consummate a second-step merger of Transatlantic with a wholly-owned subsidiary of the Original Guarantor pursuant to the General Corporation Law of the State of Delaware as promptly as practicable, subject to any Legal Requirements.

 

23.26     Transatlantic Guarantee

 

Promptly upon the consummation of the Transatlantic Acquisition, the Original Guarantor shall cause Transatlantic to provide a guarantee of all obligations of the Original Borrower to the Finance Parties under this Agreement, on terms substantially the same as Clause 19 (Guarantee and Indemnity) so long as the providing of such guarantee at such time is not prohibited by any material contract of Transatlantic or applicable law or regulation and would not result in material adverse tax consequences as reasonably determined by the Original Borrower and the Agent.  In the event that (and for so long as) such guarantee referred to in this Clause 23.26 is not provided by Transatlantic upon consummation of the Transatlantic Acquisition in accordance with the preceding sentence, the Specified Amendments shall become immediately effective (and shall remain in effect).

 

24.         EVENTS OF DEFAULT

 

Each of the events of circumstances set out in this Clause 24 (other than Clause 24.14 (Acceleration and Cancellation)) is an Event of Default.

 

24.1       Failure to Pay

 

An Obligor shall:

 

24.1.1       default in the payment when due of any Unpaid Sum payable pursuant to sub-clause 7.1.1 of Clause 7.1 (Borrower’s Indemnity to Lenders), unless such default is caused by a Disruption Event and payment is subsequently made within three Business Days of its due date;

 

24.1.2       default, and such default shall continue for three more Business Days, in the payment when due of any interest on any Unpaid Sum payable pursuant to sub-clause 7.1.1 of Clause 7.1 (Borrower’s Indemnity to Lenders); or

 

24.1.3       default, and such default shall continue for five or more Business Days, in the payment when due of any fees or any other amounts payable hereunder or pursuant to any other Finance Documents.

 

24.2       Representations, etc.

 

Any representation, warranty or statement made (or deemed made) by any Obligor or any other member of the Group that is party to a Finance Document herein or in any other Finance Document or in any certificate or statement delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made, and such misrepresentation or breach, or the circumstances giving rise to it, if capable of remedy is not remedied within 10 Business Days of the earlier of the relevant Obligor or other member of the Group becoming aware of it and the Agent giving notice to the relevant Obligor or other member of the Group requiring such remedy.

 

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24.3       Covenants

 

Any Obligor or other member of the Group that is party to a Finance Document shall:

 

24.3.1       default in the due performance or observance by it of any term, covenant or agreement contained in Clause 21.6 (Notice of Default or Litigation), sub-clause 21.13.2 of Clause 21.13 (Books, Records and Inspections), sub-clause 23.3.1 of Clause 23.3 (Maintenance of Existence; Conduct of Business) or Clause 9.1 (Letters of Credit); or

 

24.3.2       default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in Clause 24.1 (Failure to pay),  Clause  24.2 (Representations, etc.) and sub-clause 24.3.1 of this Clause 24.3) contained in this Agreement or any other Finance Document and such default shall continue unremedied for a period of 30 days after written notice to the Original Borrower from the Agent or the Majority Lenders.

 

24.4       Default under other Agreements

 

Any Obligor, any Regulated Insurance Company or any material subsidiary of Validus Reinsurance, Ltd. shall:

 

24.4.1       default in any payment of principal or interest with respect to Indebtedness (other than any Indebtedness hereunder) in excess of $50,000,000 individually or in the aggregate (such Indebtedness being “Material Indebtedness”); or

 

24.4.2       default in the observance or performance of any agreement or condition relating to any such Material Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Material Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (with or without the giving of notice, the lapse of time or both), any such Material Indebtedness to become due prior to its stated maturity.

 

24.5       Bankruptcy, etc.

 

24.5.1       Any Obligor, any Regulated Insurance Company or any material subsidiary of Validus Reinsurance, Ltd. shall commence a voluntary case concerning itself under Title 11 of the US Code entitled “Bankruptcy”, as now or hereafter in effect, or any successor thereto (the “Bankruptcy Code”);

 

24.5.2       an involuntary case is commenced against any such person and the petition is not dismissed within 60 days, after commencement of the case;

 

24.5.3       a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of any such person or any such person commences (including by way of applying for or consenting to the appointment of, or the taking of possession by, a rehabilitator, receiver, custodian, bankruptcy trustee, conservator or liquidator (collectively, a “conservator”) of itself or all or any substantial portion of its property) any other proceeding under any reorganisation, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency, liquidation, rehabilitation, supervision, 

 

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conservatorship or similar law of any jurisdiction or the Bermuda Companies Law whether now or hereafter in effect relating to any such person;

 

24.5.4       any such proceeding is commenced against any such person and such proceeding is not dismissed within 60 days;

 

24.5.5       any such person is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered;

 

24.5.6       any such person suffers any appointment of any conservator or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 60 days; or

 

24.5.7       any such person makes a general assignment for the benefit of creditors; or any corporate action is taken by any such person for the purpose of effecting any of the foregoing.

 

24.6       ERISA

 

24.6.1       An event or condition specified in sub-clauses 23.5.1 to 23.5.6 Clause 23.5 (ERISA) shall occur or exist with respect to any Plan or Multiemployer Plan or Foreign Pension Plan;

 

24.6.2       the Original Guarantor or any of its ERISA Affiliates shall fail to pay when due any amount which they shall have become liable to pay to the PBGC or to a Plan or a Multiemployer Plan under Title IV of ERISA; or

 

24.6.3       a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Plan must be terminated,

 

and as a result of such event, failure or condition, together with all such other events, failures or conditions, the Original Guarantor or any of its ERISA Affiliates shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan, a Foreign Pension Plan or PBGC (or any combination of the foregoing) in an aggregate amount  of $50,000,000 or more.

 

24.7       Judgments

 

One or more judgments or decrees shall be entered against the Original Guarantor, any Regulated Insurance Company or any material subsidiary of Validus Reinsurance, Ltd. involving a liability, net of undisputed insurance and reinsurance, of $50,000,000 or more in the case of any one such judgment or decree or in the aggregate for all such judgments and decrees for such person and any such judgments or decrees shall not have been vacated, discharged, satisfied, stayed or bonded pending appeal within 60 days from the entry thereof.

 

24.8       Insurance Licenses

 

Any one or more Insurance Licenses of the Original Guarantor or any of its subsidiaries shall be suspended, limited or terminated or shall not be renewed, or any other action shall be taken by any Governmental Authority, and such suspension, limitation, termination, non-renewal or action, either individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.

 

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24.9       Change of Control

 

A Change of Control shall occur.

 

24.10     Security Documents

 

24.10.1     Any Security Document shall cease to be in full force and effect, or shall cease to give the Security Trustee the Liens, rights, powers and privileges purported to be created thereby (including a first priority security interest in, and Lien on, all of the Collateral subject thereto, in favour of the Security Trustee, subject to the Legal Reservations and to Liens having priority by operation of law, superior to and prior to the rights of all third persons and subject to no other Liens), except to the extent resulting from the Security Trustee’s failure to maintain possession of Collateral delivered to it by any Obligor, any of their respective subsidiaries or the Account Party; or

 

24.10.2     any other pledgor thereunder shall default in the due performance or observance of:

 

(a)       any material term, covenant or agreement on its part to be performed or observed pursuant to any Security Document; or

 

(b)       any other term, covenant or agreement on its part to be performed or observed pursuant to any Security Document and such default shall continue unremedied for a period of 30 days after written notice to the Original Borrower from the Agent or the Majority Lenders.

 

24.11     Validus Guarantee

 

The Validus Guarantee or any provision thereof shall cease to be in full force or effect with respect to any Guarantor and the same is not remedied within 15 Business Days after the Agent has given written notice to the Original Guarantor of such defect, or any person acting by or on behalf of any Guarantor shall deny or disaffirm in writing  any Guarantor’s obligations under the Validus Guarantee.

 

24.12     Unlawfulness

 

It is or becomes unlawful for an Obligor or any other member of the Group to perform any of its financial obligations under the Finance Documents or any Transaction Security created or expressed to be created or evidenced by the Security Documents ceases to be effective.

 

24.13     Repudiation

 

An Obligor or any other member of the Group that is party to a Finance Document repudiates that Finance Document or any of the Transaction Security or evidences an intention to repudiate a Finance Document or any of the Transaction Security or denies or disaffirms its enforceability.

 

24.14     Acceleration and Cancellation

 

Upon the occurrence of an Event of Default and at any time thereafter while that Event of Default is continuing, the Agent may (and, if so instructed by the Majority Lenders, shall) by written notice to the Original Guarantor, take any or all of the following actions, without prejudice to the rights of the Agent or any Lender to enforce its claims against any Obligor, except as otherwise specifically provided for in this Agreement 

 

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(provided that if an Event of Default specified in Clause 24.5 (Bankruptcy, Etc.) shall occur with respect to any Obligor, the result which would occur upon the giving of written notice by the Agent as specified in sub-clauses 24.14.1 through 24.14.5 below shall occur automatically without the giving of any such notice):

 

24.14.1     require each Borrower to procure that the liabilities of the Lenders under each Letter of Credit are promptly reduced to zero (whereupon each Borrower shall do so); and/or

 

24.14.2     declare that any unutilised portion of the Facility shall be cancelled, whereupon the same shall be cancelled and the Available Commitment of each Lender shall be reduced to zero; and/or

 

24.14.3     require each Borrower to use all reasonable endeavours to procure that all Letters of Credit are cancelled and returned by Lloyd’s to the Agent; and/or

 

24.14.4     direct the Security Trustee to enforce any or all of the Liens and security interests created pursuant to the Security Documents and/or exercise any of the rights and remedies provided therein; and/or

 

24.14.5     deliver a Notice of Non-Extension to Lloyd’s in relation to each Letter of Credit then outstanding.

 

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SECTION 9
 CHANGES TO PARTIES

 

25.         CHANGES TO THE LENDERS

 

25.1       Assignments and transfers by the Lenders

 

Subject to this Clause 25, a Lender (the “Existing Lender”) may, with the prior written consent of the Original Guarantor (such consent not to be unreasonably withheld or delayed):

 

25.1.1       assign any of its rights; or

 

25.1.2       transfer by novation any of its rights and obligations,

 

to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the “New Lender”) provided that no such assignment or transfer may be made unless it is to an Approved Credit Institution.

 

25.2       Conditions of assignment or transfer

 

25.2.1       The consent of the Original Guarantor is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is:

 

(a)       to another Lender or an Affiliate of a Lender; or

 

(b)       made at a time when an Event of Default is continuing.

 

25.2.2       The consent of the Original Guarantor to an assignment or transfer must not be unreasonably withheld or delayed.  The Original Guarantor will be deemed to have given its consent five Business Days after the Existing Lender has requested it unless consent is expressly refused by the Original Guarantor within that time.

 

25.2.3       The consent of the Original Guarantor to an assignment or transfer must not be withheld solely because the assignment or transfer may result in an increase to the Mandatory Costs Rate.

 

25.2.4       An assignment will only be effective on:

 

(a)       receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties and the other Secured Parties as it would have been under if it was an Original Lender; and

 

(b)       performance by the Agent of all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender.

 

25.2.5       A transfer will only be effective if the procedure set out in Clause 25.5  (Procedure for transfer) is complied with.

 

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25.2.6       If:

 

(a)       a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

 

(b)       as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 11 (Tax Gross-up and Indemnities) or Clause 12 (Increased Costs),

 

then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.

 

25.2.7       Each New Lender, by executing the relevant Transfer Certificate, confirms, for the avoidance of doubt, that the Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.

 

25.3       Limitation of responsibility of Existing Lenders

 

25.3.1       Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

 

(a)       the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents, the Transaction Security or any other documents;

 

(b)       the financial condition of any Obligor or any other member of the Group that is party to a Finance Document;

 

(c)       the performance and observance by any Obligor or any other member of the Group that is party to a Finance Document of its obligations under the Finance Documents or any other documents; or

 

(d)       the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,

 

and any representations or warranties implied by law are excluded.

 

25.3.2       Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

 

(a)       has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor, each other member of the Group that is party to a Finance Document and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the 

 

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Existing Lender in connection with any Finance Document; and

 

(b)       will continue to make its own independent appraisal of the creditworthiness of each Obligor, each other member of the Group that is party to a Finance Document and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

 

25.3.3       Nothing in any Finance Document obliges an Existing Lender to:

 

(a)       accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 25; or

 

(b)       support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor or any other member of the Group that is party to a Finance Document of its obligations under the Finance Documents or otherwise.

 

25.4       Transfer Fees

 

The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of £2,000.

 

25.5       Procedure for transfer

 

25.5.1       Subject to the conditions set out in Clause 25.2 (Conditions of assignment or transfer) a transfer is effected in accordance with sub-clause 25.5.3 below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender.  The Agent shall, subject to sub-clause 25.5.2 below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

 

25.5.2       The Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender. Upon execution of the Transfer Certificate, the Agent may specify a Transfer Date to the Existing Lender and the New Lender provided that if no such date is specified by the Agent upon such execution,  the Transfer Date shall be the proposed Transfer Date specified in the Transfer Certificate. The Agent will, upon receipt of a duly executed Transfer Certificate, (a) advise Lloyd’s that a transfer will be made in respect of such Letter of Credit on the proposed Transfer Date, and (b) request that Lloyd’s return the relevant Letter of Credit (the “Original Letter of Credit”) to the Agent on or prior to such proposed Transfer Date.

 

25.5.3       On the Transfer Date:

 

(a)       provided that the Agent shall have received the Original Letter of Credit from Lloyd’s in accordance with sub-clause 25.5.2 above or shall have 

 

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made arrangements with Lloyd’s for the exchange of the Original Letter of Credit for a new Letter of Credit (the “Replacement Letter of Credit”) immediately after the transfer has become effective, the Agent shall execute the Transfer Certificate. The Replacement Letter of Credit shall name the New Lender as an “Issuing Lender” thereunder and shall otherwise be for the same amount and on the same terms as the Original Letter of Credit for the remainder of the Term of such Original Letter of Credit;

 

(b)       to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents and in respect of the Transaction Security each of the Obligors, each other member of the Group that is party to a Finance Document and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and in respect of the Transaction Security and their respective rights against one another shall be cancelled (being the “Discharged Rights and Obligations”);

 

(c)       each of the Obligors, each other member of the Group that is party to a Finance Document and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor, other member of the Group and the New Lender have assumed and/or acquired the same in place of that Obligor, other member of the Group and the Existing Lender;

 

(d)       the Agent, the Arranger, the Security Trustee, the New Lender and the other Lenders shall acquire the same rights and assume the same obligations between themselves and in respect of the Transaction Security as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent, the Arranger, the Security Trustee and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and

 

(e)       the New Lender shall become a Party as a “Lender”.

 

25.6       Copy of Transfer Certificate to Original Borrower

 

The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate, send to the Original Borrower a copy of that Transfer Certificate.

 

25.7       Security over Lenders’ rights

 

In addition to the other rights provided to Lenders under this Clause 25, each Lender may without consulting with or obtaining consent from any Obligor, at any time charge, assign or otherwise create Liens in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:

 

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25.7.1       any charge, assignment or other Liens to secure obligations to a federal reserve or central bank, governmental authorities, agencies or departments (including HM Treasury) or other authorised government bodies; and

 

25.7.2       in the case of any Lender which is a fund, any charge, assignment or other Liens granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities,

 

and utilise Letters of Credit or rights and obligations relating to those Letters of Credit for any type of securitisation or collateralisation except that no such charge, assignment or Liens shall:

 

(a)       release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Liens for the Lender as a party to any of the Finance Documents; or

 

(b)       require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the relevant Lender under the Finance Documents.

 

25.8       Additional Lenders

 

A bank or financial institution which is to be an Additional Lender (as defined in Clause 10 (Commitment Increase Request)) shall only become a party to this Agreement as a Lender if it has executed and delivered to the Agent an Additional Lender Accession Letter and the Agent has countersigned the same (which the Agent agrees to do promptly upon its receipt of the relevant Additional Lender Accession Letter) provided that the Agent shall not be obliged to provide such countersignature until it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to such bank or financial institution.

 

26.         CHANGES TO THE OBLIGORS

 

26.1       Assignment and transfers by Obligors

 

No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents, it being understood that new or replacement Pledgors (as defined in the Security Documents) may accede to the Security Documents in accordance with their terms.

 

26.2       Additional Borrowers

 

26.2.1       Subject to compliance with the provisions of sub-clauses 21.14.3 and 21.14.4 of Clause 21.14 (“Know your customer” checks), the Original Guarantor may request that any of its wholly owned subsidiaries becomes a Borrower.  That subsidiary shall become a Borrower if:

 

(a)       all the Lenders approve the addition of that subsidiary;

 

(b)       the Original Guarantor and that subsidiary deliver to the Agent a duly completed and executed Obligor Accession Letter;

 

(c)       the subsidiary is (or becomes) a Guarantor prior to becoming a Borrower;

 

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(d)       the Original Guarantor confirms that no Default is continuing or would occur as a result of that subsidiary becoming an Additional Borrower; and

 

(e)       the Agent has received all of the documents and other evidence listed in Part B of Schedule 2 (Conditions precedent) in relation to that Additional Borrower, each in form and substance satisfactory to the Agent.

 

26.2.2       The Agent shall notify the Original Guarantor and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part B of Schedule 2 (Conditions precedent).

 

26.3       Resignation of a Borrower

 

26.3.1       With the prior consent of all the Lenders, the Original Guarantor may request that a Borrower (other than the Original Borrower) ceases to be a Borrower by delivering to the Agent an Obligor Resignation Letter.

 

26.3.2       The Agent shall accept an Obligor Resignation Letter and notify the Original Guarantor and the other Finance Parties of its acceptance if:

 

(a)       the Original Guarantor has confirmed that no Default is continuing or would result from the acceptance of the Obligor Resignation Letter;

 

(b)       that Borrower is under no actual or contingent obligations as a Borrower under any Finance Documents; and

 

(c)       where that Borrower is also a Guarantor (unless its resignation has been  accepted in accordance with Clause 26.5 (Resignation of a Guarantor)), its obligations in its capacity as Guarantor continue to be legal, valid, binding and enforceable and in full force and effect (subject to the Legal Reservations) and the amount guaranteed by it as a Guarantor is not decreased (and the Original Guarantor has confirmed this is the case).

 

26.3.3       Upon notification by the Agent to the Original Guarantor of its acceptance of the resignation of a Borrower, that company shall cease to be a Borrower and shall have no further rights or obligations under the Finance Documents as a Borrower.

 

26.3.4       The Agent may, at the cost and expense of the Original Guarantor, require a legal opinion from counsel to the Agent confirming the matters set out in paragraph (c) of sub-clause 26.3.2 above and the Agent shall be under no obligation to accept an Obligor Resignation Letter until it has obtained such opinion in form and substance satisfactory to it.

 

26.4       Additional Guarantors

 

26.4.1       Subject to compliance with the provisions of sub-clauses 21.14.3 and 21.14.4 of Clause 21.14 (“Know your customer” checks), the Original Guarantor may request that any of its wholly owned subsidiaries become a Guarantor. That subsidiary shall become an Additional Guarantor if:

 

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(a)       the Original Guarantor and the proposed Additional Guarantor deliver to the Agent a duly completed and executed Obligor Accession Letter; and

 

(b)       the Agent has received all of the documents and other evidence listed in Part B of Schedule 2 (Conditions Precedent) in relation to that Additional Guarantor, each in form and substance satisfactory to the Agent.

 

26.4.2       The Agent shall notify the Original Guarantor and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part B of Schedule 2 (Conditions precedent).

 

26.5       Resignation of a Guarantor

 

26.5.1       The Original Guarantor may request that a Guarantor (other than the Original Guarantor) ceases to be a Guarantor by delivering to the Agent an Obligor Resignation Letter if all the Lenders have consented to the resignation of that Guarantor.

 

26.5.2       The Agent shall accept an Obligor Resignation Letter and notify the Original Guarantor and the Lenders of its acceptance if:

 

(a)       the Original Guarantor has confirmed that no Default is continuing or would result from the acceptance of the Obligor Resignation Letter;

 

(b)       no payment is due from the Guarantor under Clause 19 (Guarantee and  indemnity); and

 

(c)       where the Guarantor is also a Borrower, it is under no actual or contingent obligations as a Borrower and has resigned and ceased to be a Borrower under Clause 26.3 (Resignation of a Borrower).

 

26.5.3       Upon notification by the Agent to the Original Guarantor of its acceptance of the resignation of a Guarantor, that company shall cease to be a Guarantor and shall have no further rights or obligations under the Finance Documents as a Guarantor.

 

26.6       Repetition of Representations

 

Delivery of an Obligor Accession Letter constitutes confirmation by the relevant subsidiary that the representations and warranties set out in Clause 20 (Representations) are true and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.

 

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SECTION 10

THE FINANCE PARTIES

 

27.         ROLE OF THE AGENT  AND THE ARRANGER

 

27.1       Appointment of the Agent

 

27.1.1       Each other Finance Party (other than the Security Trustee) appoints the Agent to act as its agent under and in connection with the Finance Documents.

 

27.1.2       Each other Finance Party authorises the Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.

 

27.2       Duties of the Agent

 

27.2.1       The Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.

 

27.2.2       Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

 

27.2.3       If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties.

 

27.2.4       If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent, the Arranger or the Security Trustee) under this Agreement it shall promptly notify the other Finance Parties.

 

27.2.5       The Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.

 

27.3       Role of the Arranger

 

Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.

 

27.4       No fiduciary duties

 

27.4.1       Nothing in this Agreement constitutes the Agent or the Arranger as a trustee or fiduciary of any other person.

 

27.4.2       Neither the Agent nor the Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

 

27.5       Business with the Group

 

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

 

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27.6       Rights and discretions of the Agent

 

27.6.1       The Agent may rely on:

 

(a)       any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

 

(b)       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.

 

27.6.2       The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

 

(a)       no Default has occurred (unless it has actual knowledge of a Default arising under Clause 24.1 (Failure to pay));

 

(b)       any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and

 

(c)       any notice or request made by a Borrower (other than a Utilisation Request) is made on behalf of and with the consent and knowledge of each Guarantor.

 

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

 

27.6.4       The Agent may act in relation to the Finance Documents through its personnel and agents.

 

27.6.5       The Agent may disclose to any other Party any information it reasonably believes it has received as Agent under this Agreement.

 

27.6.6       Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

 

27.7       Majority Lenders’ instructions

 

27.7.1       Unless a contrary indication appears in a Finance Document, the Agent shall (i) exercise any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as Agent) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders.

 

27.7.2       Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties other than the Security Trustee.

 

27.7.3       The Agent may refrain from acting in accordance with the instructions of the 

 

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Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.

 

27.7.4       In the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders) the Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.

 

27.7.5       The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings relating to any Finance Document.

 

27.8       Responsibility for documentation

 

Neither the Agent nor the Arranger is responsible for:

 

27.8.1       the adequacy, accuracy and/or completeness of any information (whether oral or written) provided by the Agent, the Arranger, an Obligor or any other person given in or in connection with any Finance Document or the transactions contemplated by the Finance Documents; or

 

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

 

27.9       Exclusion of liability

 

27.9.1       Without limiting sub-clause 27.9.2 below (and without prejudice to the provisions of sub-clause 31.10.5 of Clause 31.10 (Disruption to Payment Systems etc.), the Agent will not be liable (including, without limitation, for negligence or any other category of liability whatsoever) for any action taken by it under or in connection with any Finance Document or the Transaction Security, unless caused by its gross negligence or wilful misconduct.

 

27.9.2       No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Agent may rely on this Clause.

 

27.9.3       The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose.

 

27.9.4       Nothing in this Agreement shall oblige the Agent or the Arranger to carry out any “know your customer” or other checks in relation to any person on behalf  of any Lender and each Lender confirms to the Agent and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may 

 

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not rely on any statement in relation to such checks made by the Agent or the Arranger.

 

27.10     Lenders’ indemnity to the Agent

 

Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent, within three Business Days of demand, against any cost, loss or liability including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent (otherwise than by reason of the Agent’s gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 31.10 (Disruption to Payment Systems etc.) notwithstanding the Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) in acting as Agent under the Finance Documents (unless the Agent has been reimbursed by an Obligor or any other member of the Group that is party to a Finance Document pursuant to a Finance Document).

 

27.11     Resignation of the Agent

 

27.11.1     The Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom as successor by giving notice to the other Finance Parties and the Original Borrower.

 

27.11.2     Alternatively the Agent may resign by giving notice to the other Finance Parties and the Original Borrower, in which case the Majority Lenders (after consultation with the Original Borrower) may appoint a successor Agent.

 

27.11.3     If the Majority Lenders have not appointed a successor Agent in accordance with sub-clause 27.11.2 above within 30 days after notice of resignation was given, the Agent (after consultation with the Original Borrower) may appoint a successor Agent (acting through an office in the United Kingdom).

 

27.11.4     The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents.

 

27.11.5     The Agent’s resignation notice shall only take effect upon the appointment of a successor.

 

27.11.6     Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 27.  Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

 

27.11.7     After consultation with the Original Borrower, the Majority Lenders may, by  no less that 30 days’ notice to the Agent, require it to resign in accordance with sub-clause 27.11.2 above.  In this event, the Agent shall resign in accordance with sub-clause 27.11.2 above.

 

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27.12     Confidentiality

 

27.12.1     In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.

 

27.12.2     If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.

 

27.12.3     Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the Arranger is obliged to disclose to any other person (i) any confidential information or (ii) any other information if the disclosure would or might in its reasonable opinion constitute a breach of any law or a breach of a fiduciary duty.

 

27.13     Relationship with the Lenders

 

27.13.1     The Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than five Business Days’ prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

 

27.13.2     Each Lender shall supply the Agent with any information required by the Agent in order to calculate the Mandatory Cost in accordance with Schedule 7 (Mandatory Costs Rate).

 

27.13.3     Each Secured Party shall supply the Agent with any information that the Security Trustee may reasonably specify (through the Agent) as being necessary or desirable to enable the Security Trustee to perform its functions as security trustee.  Each Lender shall deal with the Security Trustee exclusively through the Agent and shall not deal directly with the Security Trustee.

 

27.14     Credit appraisal by the Lenders

 

Without affecting the responsibility of any Obligor or any other member of the Group that is party to a Finance Document for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:

 

27.14.1     the financial condition, creditworthiness, condition, affairs, status and nature of each member of the Group;

 

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

 

27.14.3     whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the Transaction Security, the transactions contemplated by 

 

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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;

 

27.14.4     the adequacy, accuracy and/or completeness of any information provided by the Agent, the Security Trustee, any Party or by 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; and

 

27.14.5     the right or title of any person in or to, or the value or sufficiency of any part of the Charged Property, the priority of any of the Transaction Security or the existence of any Liens affecting the Charged Property,

 

and each Lender warrants to the Agent and the Arranger that it has not relied on and will not at any time rely on the Agent or the Arranger in respect of any of these matters.

 

27.15     Agent’s Management Time

 

Any amount payable to the Agent under Clause 14.3 (Indemnity to the Agent), Clause 17 (Costs and expenses) and Clause 27.10 (Lenders’ indemnity to the Agent) shall include the cost of utilising the Agent’s management time or other resources for any purpose not expressly contemplated by this Agreement and will be calculated on the basis of such reasonable daily or hourly rates as the Agent may notify to the Original Borrower and the Lenders, and is in addition to any fee paid or payable to the Agent under Clause 16 (Commitment Commission and Fees).

 

27.16     Deduction from amounts payable by the Agent

 

If any Finance Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Finance Party, deduct an amount not exceeding that amount from any payment to that Finance Party which the Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed.  For the purposes of the Finance Documents that Finance Party shall be regarded as having received any amount so deducted.

 

28.         ROLE OF SECURITY TRUSTEE

 

28.1       Trust

 

The Security Trustee declares that it shall hold the Transaction Security on trust for the Secured Parties on the terms contained in this Agreement.  Each of the parties to this Agreement agrees that the Security Trustee shall have only those duties, obligations  and responsibilities expressly specified in this Agreement or in the Security Documents (and no others shall be implied).

 

28.2       No Independent Power

 

The Secured Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise any rights or powers arising under the Security Documents except through the Security Trustee.

 

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28.3       Security Trustee’s Instructions

 

The Security Trustee shall:

 

28.3.1       unless a contrary indication appears in a Finance Document, act in accordance with any instructions given to it by the Agent and shall be entitled to assume that (i) any instructions received by it from the Agent are duly given by or on behalf of the Majority Lenders or, as the case may be, the Lenders in accordance with the terms of the Finance Documents and (ii) unless it has received actual notice of revocation that any instructions or directions given by the Agent have not been revoked;

 

28.3.2       be entitled to request instructions, or clarification of any direction, from the Agent as to whether, and in what manner, it should exercise or refrain from exercising any rights, powers and discretions and the Security Trustee may refrain from acting unless and until those instructions or clarification are received by it; and

 

28.3.3       be entitled to, carry out all dealings with the Lenders through the Agent and may give to the Agent any notice or other communication required to be given by the Security Trustee to the Lenders.

 

28.4       Security Trustee’s Actions

 

Subject to the provisions of this Clause 28:

 

28.4.1       the Security Trustee may, in the absence of any instructions to the contrary, take such action in the exercise of any of its powers and duties under the Finance Documents which in its absolute discretion it considers to be for the protection and benefit of all the Secured Parties; and

 

28.4.2       at any time after receipt by the Security Trustee of notice from the Agent directing the Security Trustee to exercise all or any of its rights, remedies, powers or discretions under any of the Finance Documents, the Security Trustee may, and shall if so directed by the Agent, take any action as in its sole discretion it thinks fit to enforce the Transaction Security.

 

28.5       Security Trustee’s Discretions

 

The Security Trustee may:

 

28.5.1       assume (unless it has received actual notice to the contrary in its capacity as Security Trustee for the Secured Parties) that (i) no Default has occurred and no Obligor or any other member of the Group that is party to a Finance  Document is in breach of or default under its obligations under any of the Finance Documents; and (ii) any right, power, authority or discretion vested in any person has not been exercised;

 

28.5.2       if it receives any instructions or directions from the Agent to take any action in relation to the Transaction Security, assume that all applicable conditions under the Finance Documents for taking that action have been satisfied;

 

28.5.3       engage, pay for and rely on the advice or services of any lawyers, accountants, 

 

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surveyors or other experts (whether obtained by the Security Trustee or by any other Secured Party) whose advice or services may at any time seem necessary, expedient or desirable;

 

28.5.4       rely upon any communication or document believed by it to be genuine and, as to any matters of fact which might reasonably be expected to be within the knowledge of a Secured Party, an Obligor or any other member of the Group that is party to a Finance Document, upon a certificate signed by or on behalf of that person; and

 

28.5.5       refrain from acting in accordance with the instructions of the Agent or Lenders (including bringing any legal action or proceeding arising out of or in connection with the Finance Documents) until it has received any indemnification and/or security that it may in its absolute discretion require (whether by way of payment in advance or otherwise) for all costs, losses and liabilities which it may incur in bringing such action or proceedings.

 

28.6       Security Trustee’s Obligations

 

The Security Trustee shall promptly inform the Agent of:

 

28.6.1       the contents of any notice or document received by it in its capacity as Security Trustee from any Obligor or any other member of the Group that is party to a Finance Document under any Finance Document; and

 

28.6.2       the occurrence of any Default or any default by an Obligor or any other member of the Group that is party to a Finance Document in the due performance of or compliance with its obligations under any Finance Document of which the Security Trustee has received notice from any other party to this Agreement or any other Finance Document.

 

28.7       Excluded Obligations

 

Notwithstanding anything to the contrary expressed or implied in the Finance Documents, the Security Trustee shall not:

 

28.7.1       be bound to enquire as to (i) whether or not any Default has occurred or (ii) the performance, default or any breach by an Obligor or any other member of the Group that is party to a Finance Document of its obligations under any of the Finance Documents;

 

28.7.2       be bound to account to any other Secured Party for any sum or the profit  element of any sum received by it for its own account;

 

28.7.3       be bound to disclose to any other person (including but not limited to any Secured Party) (i) any confidential information or (ii) any other information if disclosure would, or might in its reasonable opinion, constitute a breach of any law or be a breach of fiduciary duty;

 

28.7.4       be under any obligations other than those which are specifically provided for in the Finance Documents; or

 

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28.7.5       without prejudice to Clause 33.1 (Order of Application), have or be deemed to have any duty, obligation or responsibility to, or relationship of trust or agency with, any Obligor or any other member of the Group that is party to a Finance Document except those to or with the Obligors which are expressly set forth in the relevant Finance Document (to the extent that the Parties are permitted by law to exclude such duty, obligation, responsibility or relationship, except to the extent arising as a result of its gross negligence or wilful misconduct).

 

28.8       Exclusion of Security Trustee’s liability

 

The Security Trustee is not responsible or liable for:

 

28.8.1       the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Security Trustee or any other person in or in connection with any Finance Document or the transactions contemplated in the Finance Documents;

 

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

 

28.8.3       any losses to any person or any liability arising as a result of taking or refraining from taking any action in relation to any of the Finance Documents or the Transaction Security or otherwise, whether in accordance with an instruction from the Agent or otherwise, unless caused by its gross negligence or wilful misconduct;

 

28.8.4       the exercise of, or the failure to exercise, any judgement, discretion or power given to it by or in connection with any of the Finance Documents, the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, the Finance Documents or the Transaction Security; or

 

28.8.5       any shortfall which arises on the enforcement of the Transaction Security (to the extent that the Parties are permitted by law to exclude such responsibility or liability).

 

28.9       No proceedings

 

No Party (other than the Security Trustee) may take any proceedings against any officer, employee or agent of the Security Trustee in respect of any claim it might have against the Security Trustee or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document or any Transaction Security and any officer, employee or agent of the Security Trustee may rely on this Clause.

 

28.10     Own responsibility

 

Without affecting the responsibility of any Obligor or any other member of the Group that is party to a Finance Document for information supplied by it or on its behalf in connection with any Finance Document, each Secured Party confirms to the Security Trustee that it has at all times been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in 

 

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connection with any Finance Document including but not limited to:

 

28.10.1     the financial condition, creditworthiness, condition, affairs, status and nature of each member of the Group;

 

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

 

28.10.3     whether that Secured Party has recourse, and the nature and extent of that recourse, against any Party or any other person or any of their respective assets under or in connection with any Finance Document, the Transaction Security, 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 the Transaction Security;

 

28.10.4     the adequacy, accuracy and/or completeness of any information provided by the Security Trustee or by 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; and

 

28.10.5     the right or title of any person in or to, or the value or sufficiency of any part of the Charged Property, the priority of any of the Transaction Security or the existence of any Liens affecting the Charged Property,

 

and each Secured Party warrants to the Security Trustee that it has not relied on and will not at any time rely on the Security Trustee in respect of any of these matters.

 

28.11     No responsibility to perfect Transaction Security

 

The Security Trustee shall not be liable for any failure to:

 

28.11.1     require the deposit with it of any deed or document certifying, representing or constituting the title of any Obligor or any other member of the Group that is party to a Finance Document to any of the Charged Property;

 

28.11.2     obtain any license, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any of the Finance Documents or the Transaction Security;

 

28.11.3     register, file or record or otherwise protect any of the Transaction Security (or the priority of any of the Transaction Security) under any applicable laws in any jurisdiction or to give notice to any person of the execution of any of the Finance Documents or of the Transaction Security;

 

28.11.4     take, or to require any of the Obligors or any other member of the Group that is party to a Finance Document to take, any steps to perfect its title to any of the Charged Property or to render the Transaction Security effective or to secure the 

 

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creation of any ancillary Liens under the laws of any jurisdiction; or

 

28.11.5     require any further assurances in relation to any of the Security Documents.

 

28.12     Insurance by Security Trustee

 

28.12.1     The Security Trustee shall not be under any obligation to insure any of the Charged Property, to require any other person to maintain any insurance or to verify any obligation to arrange or maintain insurance contained in the Finance Documents.  The Security Trustee shall not be responsible for any loss which may be suffered by any person as a result of the lack of or inadequacy of any such insurance.

 

28.12.2     Where the Security Trustee is named on any insurance policy as an insured party, it shall not be responsible for any loss which may be suffered by reason of, directly or indirectly, its failure to notify the insurers of any material fact relating to the risk assumed by the insurers or any other information of any kind, unless any Secured Party has requested it to do so in writing and the Security Trustee has failed to do so within fourteen days after receipt of that request.

 

28.13     Custodians and Nominees

 

The Security Trustee may (after consultation with the Original Borrower) appoint and pay any person to act as a custodian or nominee on any terms in relation to any assets of the trust as the Security Trustee may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the trust created under this Agreement and the Security Trustee shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this  Agreement or be bound to supervise the proceedings or acts of any person.

 

28.14     Acceptance of Title

 

The Security Trustee shall be entitled to accept without enquiry, and shall not be obliged to investigate, the right and title that each of the Obligors or any other member of the Group that is party to a Finance Document may have to any of the Charged Property and shall not be liable for or bound to require any Obligor or any other member of the Group that is party to a Finance Document to remedy any defect in its right or title.

 

28.15     Refrain from Illegality

 

The Security Trustee may refrain from doing anything which in its opinion will or may be contrary to any relevant law, directive or regulation of any jurisdiction which would or might otherwise render it liable to any person, and the Security Trustee may do anything which is, in its opinion, necessary to comply with any law, directive or regulation.

 

28.16     Business with the Obligors

 

The Security Trustee may accept deposits from, lend money to, and generally engage in any kind of banking or other business with any of the Obligors.

 

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28.17     Releases

 

Upon a disposal of any of the Charged Property:

 

28.17.1     pursuant to the enforcement of the Transaction Security by a Receiver or the Security Trustee; or

 

28.17.2     if that disposal is permitted under the Finance Documents,

 

the Security Trustee shall (at the cost of the Obligors) release that property from the Transaction Security and is authorised to execute, without the need for any further authority from the Secured Parties, any release of the Transaction Security or other claim over that asset and to issue any certificates of non-crystallisation of floating charges that may be required or desirable.

 

28.18     Winding up of Trust

 

If the Security Trustee, with the approval of the Majority Lenders, determines that (a) all of the Secured Obligations and all other obligations secured by any of the Security Documents have been fully and finally discharged and (b) none of the Secured Parties is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Obligor pursuant to the Finance Documents, the trusts set out in this Agreement shall be wound up and the Security Trustee shall release, without recourse or warranty, all of the Transaction Security and the rights of the Security Trustee under each of the Security Documents.

 

28.19     Powers Supplemental

 

The rights, powers and discretions conferred upon the Security Trustee by this Agreement shall be supplemental to the Trustee Act 1925 and the Trustee Act 2000 and in addition to any which may be vested in the Security Trustee by general law or  otherwise.

 

28.20     Trustee division separate

 

28.20.1     In acting as trustee for the Secured Parties, the Security Trustee shall be regarded as acting through its agency or trustee division which shall be treated as a separate entity from any other of its divisions or departments.

 

28.20.2     If information is received by another division or department of the Security Trustee, it may be treated as confidential to that division or department and the Security Trustee shall not be deemed to have notice of it.

 

28.21     Lender’s indemnity to the Security Trustee

 

Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Security Trustee, within three Business Days of demand, against any cost, loss or liability incurred by the Security Trustee (otherwise than by reason of the Security Trustee’s gross negligence or wilful misconduct) in acting as Security Trustee under the Finance Documents (unless the Security Trustee has been reimbursed by an Obligor or any other member of the Group that is party to a Finance Document pursuant to a Finance Document).

 

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28.22     Disapplication

 

Section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Trustee in relation to the trusts constituted by this Agreement.  Where there are any inconsistencies between the Trustee Act 1925 and the Trustee Act 2000 and the provisions of this Agreement, the provisions of this Agreement shall, to the extent allowed by law, prevail and, in the case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement shall constitute a restriction or exclusion for the purposes of that Act.

 

28.23     Resignation of Security Trustee

 

28.23.1     The Security Trustee may resign and appoint one of its Affiliates as successor by giving notice to the Original Guarantor and to the Agent (on behalf of the Lenders).

 

28.23.2     Alternatively the Security Trustee may resign by giving notice to the other Parties (or to the Agent on behalf of the Lenders) in which case the Majority Lenders may (after consultation with the Original Borrower) appoint a successor Security Trustee.

 

28.23.3     If the Majority Lenders have not appointed a successor Security Trustee in accordance with sub-clause 28.23.2 above within 30 days after the notice of resignation was given, the Security Trustee (after consultation with the Agent) may appoint a successor Security Trustee.

 

28.23.4     The retiring Security Trustee shall, at its own cost, make available to the successor Security Trustee such documents and records and provide such assistance as the successor Security Trustee may reasonably request for the  purposes of performing its functions as Security Trustee under the Finance Documents.

 

28.23.5     The Security Trustee’s resignation notice shall only take effect upon (i) the appointment of a successor and (ii) the transfer of all of the Transaction Security to that successor.

 

28.23.6     Upon the appointment of a successor, the retiring Security Trustee shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of Clauses 27 (Role of the Agent  and  the Arranger) and 28 (Role of Security Trustee).  Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

 

28.23.7     The Majority Lenders may, by notice to the Security Trustee, require it to resign in accordance with sub-clause 28.23.2 above. In this event, the Security Trustee shall resign in accordance with sub-clause 28.23.2 above.

 

28.24     Delegation

 

28.24.1     The Security Trustee may, at any time, delegate by power of attorney or otherwise to any person for any period, all or any of the rights, powers and discretions vested in it by any of the Finance Documents.

 

28.24.2     The delegation may be made upon any terms and conditions (including the 

 

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power to sub-delegate) and subject to any restrictions that the Security Trustee may think fit in the interests of the Secured Parties and it shall not be bound to supervise, or be in any way responsible for any loss incurred by reason of any misconduct or default on the part of any Delegate or sub-delegate.

 

28.25     Additional Security Trustees

 

28.25.1     The Security Trustee may at any time appoint (and subsequently remove) any person to act as a separate security trustee or as a co-security trustee jointly with it (i) if it considers that appointment to be in the interests of the Secured Parties or (ii) for the purposes of conforming to any legal requirements, restrictions or conditions which the Security Trustee deems to be relevant or (iii) for obtaining or enforcing any judgment in any jurisdiction, and the Security Trustee shall give prior notice to the Original Borrower and the Agent of that appointment.

 

28.25.2     Any person so appointed shall have the rights, powers and discretions (not exceeding those conferred on the Security Trustee by this Agreement) and the duties and obligations that are conferred or imposed by the instrument of appointment.

 

28.25.3     The remuneration that the Security Trustee may pay to any person, and any costs and expenses incurred by that person in performing its functions pursuant to that appointment shall, for the purposes of this Agreement, be treated as costs and expenses incurred by the Security Trustee.

 

29.         CONDUCT OF BUSINESS BY THE FINANCE PARTIES

 

No provision of this Agreement will:

 

29.1.1       interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

 

29.1.2       oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

 

29.1.3       oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

 

30.         SHARING AMONG THE FINANCE PARTIES

 

30.1       Payments to Finance Parties

 

If a Finance Party (a “Recovering Finance Party”) receives or recovers any amount from an Obligor other than in accordance with Clause 31 (Payment mechanics) or Clause 33 (Application of Proceeds) and applies that amount to a payment due under the Finance Documents then:

 

30.1.1       the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Agent;

 

30.1.2       the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with 

 

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Clause 31 (Payment mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and

 

30.1.3       the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the “Sharing Payment”) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 31.5 (Partial payments).

 

30.2       Redistribution of payments

 

The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) in accordance with Clause 31.5 (Partial payments).

 

30.3       Recovering Finance Party’s rights

 

30.3.1       On a distribution by the Agent under Clause 30.2 (Redistribution of payments), the Recovering Finance Party will be subrogated to the rights of the Finance Parties which have shared in the redistribution.

 

30.3.2       If and to the extent that the Recovering Finance Party is not able to rely on its rights under sub-clause 30.3.1 above, the relevant Obligor shall be liable to the Recovering Finance Party for a debt equal to the Sharing Payment which is immediately due and payable.

 

30.4       Reversal of redistribution

 

If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

 

30.4.1       each Finance Party which has received a share of the relevant Sharing Payment pursuant to Clause 30.2 (Redistribution of payments) shall, upon request of the Agent, pay to the Agent for account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay); and

 

30.4.2       that Recovering Finance Party’s rights of subrogation in respect of any reimbursement shall be cancelled and the relevant Obligor will be liable to the reimbursing Finance Party for the amount so reimbursed.

 

30.5       Exceptions

 

30.5.1       This Clause 30 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause 30, have a valid and enforceable claim against the relevant Obligor.

 

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30.5.2       A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

 

(a)       it notified that other Finance Party of the legal or arbitration proceedings; and

 

(b)       that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

 

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SECTION 11

ADMINISTRATION

 

31.         PAYMENT MECHANICS

 

31.1       Payments to the Agent

 

31.1.1       On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or Lender shall make the same available to the Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

 

31.1.2       Payment shall be made to such account in the principal financial centre of the country of that currency with such bank as the Agent specifies.

 

31.2       Distributions by the Agent

 

Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 31.3 (Distributions to an Obligor), Clause 31.4 (Clawback) and Clause 27.16 (Deduction from amounts payable by the Agent) be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days’ notice with a bank in the principal financial centre of the country of that currency.

 

31.3       Distributions to an Obligor

 

The Agent may (with the consent of the relevant Obligor or in accordance with Clause 32 (Set-off)) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.

 

31.4       Clawback

 

31.4.1       Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

 

31.4.2       If the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.

 

31.5       Partial payments

 

31.5.1       If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents,  the Agent shall apply that payment towards the obligations of that Obligor under the 

 

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Finance Documents in the following order:

 

(a)       first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent, the Security Trustee (including of any Receiver or Delegate) and the Arranger under the Finance Documents;

 

(b)       secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;

 

(c)       thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and

 

(d)       fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

 

31.5.2       The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a) to (d) of sub-clause 31.5.1 above.

 

31.5.3       Sub-clauses 31.5.1 and 31.5.2 above will override any appropriation made by an Obligor.

 

31.6       No set-off by Obligors

 

All payments to be made by an Obligor or other member of the Group under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

 

31.7       Business Days

 

31.7.1       Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day and such payment shall be deemed made on the date due.

 

31.7.2       During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

 

31.8       Currency of account

 

31.8.1       Subject to sub-clauses 31.8.2 to 31.8.5 below, the Base Currency is the currency of account and payment for any sum due from an Obligor or other member of the Group under any Finance Document.

 

31.8.2       A repayment of an Unpaid Sum or a part of an Unpaid Sum shall be made in the currency in which that Unpaid Sum is denominated on its due date.

 

31.8.3       Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

 

31.8.4       Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

 

31.8.5       Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency.

 

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31.9       Change of currency

 

31.9.1       Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

 

(a)       any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Original Borrower); and

 

(b)       any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably).

 

31.9.2       If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Original Borrower) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.

 

31.10     Disruption to Payment Systems etc.

 

If either the Agent determines (in its discretion) that a Disruption Event has occurred or the Agent is notified by the Original Borrower that a Disruption Event has occurred:

 

31.10.1     the Agent may, and shall if requested to do so by the Original Borrower, consult with the Original Borrower with a view to agreeing with the Original Borrower such changes to the operation or administration of the Facility as the Agent may deem necessary in the circumstances;

 

31.10.2     the Agent shall not be obliged to consult with the Original Borrower in relation to any changes mentioned in sub-clause 31.10.1 above if, in its opinion (acting reasonably), it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;

 

31.10.3     the Agent may consult with the Finance Parties in relation to any changes mentioned in sub-clause 31.10.1 above but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;

 

31.10.4     any such changes agreed upon by the Agent and the Original Borrower shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 39 (Amendments and Waivers);

 

31.10.5     the Agent shall not be liable for any damages, costs or losses whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) arising as a result of its taking, or failing to take, any actions 

 

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pursuant to or in connection with this Clause 31.10; and

 

31.10.6     the Agent shall notify the Finance Parties of all changes agreed pursuant to sub-clause 31.10.4 above.

 

32.         SET-OFF

 

For so long as an Event of Default is continuing, a Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation.  If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

 

33.         APPLICATION OF PROCEEDS

 

33.1       Order of Application

 

All moneys from time to time received or recovered by the Security Trustee in connection with the realisation or enforcement of all or any part of the Transaction Security shall be held by the Security Trustee on trust to apply them at such times as the Security Trustee sees fit, to the extent permitted by applicable law, in the following order of priority:

 

33.1.1       in discharging any sums owing to the Security Trustee (in its capacity as trustee), any Receiver or any Delegate;

 

33.1.2       in payment to the Agent, on behalf of the Secured Parties, for application towards the discharge of all sums due and payable by any Obligor or other member of the Group under any of the Finance Documents in accordance with Clause 31.5 (Partial payments);

 

33.1.3       if none of the Obligors or any other member of the Group is under any further actual or contingent liability under any Finance Document, in payment to any person to whom the Security Trustee is obliged to pay in priority to any Obligor or other member of the Group pursuant to the Finance Documents; and

 

33.1.4       the balance, if any, in payment to the relevant Obligor or other member of the Group.

 

33.2       Investment of Proceeds

 

Prior to the application of the proceeds of the Transaction Security in accordance with Clause 33.1 (Order of Application) the Security Trustee may, at its discretion, hold all or part of those proceeds in an interest bearing suspense or impersonal account(s) in the name of the Security Trustee or Agent with any financial institution (including  itself) and for so long as the Security Trustee thinks fit (the interest being credited to the relevant account) pending the application from time to time of those monies at the Security Trustee’s discretion in accordance with the provisions of this Clause 33.

 

33.3       Currency Conversion

 

33.3.1       For the purpose of or pending the discharge of any of the Secured Obligations 

 

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the Security Trustee may convert any moneys received or recovered by the Security Trustee from one currency to another, at the spot rate at which the Security Trustee is able to purchase the currency (in accordance with its customary procedures) in which the Secured Obligations are due with the amount received.

 

33.3.2       The obligations of any Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion.

 

33.4       Permitted Deductions

 

The Security Trustee shall be entitled (a) to set aside by way of reserve amounts required to meet and (b) to make and pay, any deductions and withholdings (on account of Tax or otherwise) which it is or may be required by any applicable law to make from any distribution or payment made by it under this Agreement, and to pay all Tax which may be assessed against it in respect of any of the Charged Property, or as a consequence of performing its duties, or by virtue of its capacity as Security Trustee under any of the Finance Documents or otherwise (except in connection with its remuneration for performing its duties under this Agreement).

 

33.5       Discharge of Secured Obligations

 

33.5.1       Any payment to be made in respect of the Secured Obligations by the Security Trustee may be made to the Agent on behalf of the Lenders and that payment shall be a good discharge to the extent of that payment, to the Security Trustee.

 

33.5.2       The Security Trustee is under no obligation to make payment to the Agent in the same currency as that in which any Unpaid Sum is denominated.

 

33.6       Sums received by Obligors

 

If any of the Obligors receives any sum which, pursuant to any of the Finance Documents, should have been paid to the Security Trustee, that sum shall promptly be paid to the Security Trustee for application in accordance with this Clause 33.

 

34.         NOTICES

 

34.1       Communications in writing

 

Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

 

34.2       Addresses

 

The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to  be made or delivered under or in connection with the Finance Documents is:

 

34.2.1       in the case of any Obligor or any other member of the Group party to any Finance Document, to:

 

	
Address:
    	
Validus Holdings, Ltd.
    
	
 
    	
19 Par-La-Ville Road
    
	
 
    	
Hamilton HM11 Bermuda,
    

 

122

 

	
Attention:
    	
Chief Financial Officer
    
	
Facsimile:
    	
+1 (441) 278-9091,
    

 

with a copy to:

 

	
Address:
    	
Talbot Holdings Ltd.
    
	
 
    	
19 Par-La-Ville Road
    
	
 
    	
Hamilton HM11 Bermuda,
    
	
 
    	
 
    
	
Attention:
    	
Chief Financial Officer
    
	
Facsimile:
    	
+1(441) 278-9091; and
    

 

a copy by fax to +44 (0)20 7550 3555, marked for the attention of Nigel Wachman and (in the case of notice of a Default only) a copy to:

 

	
Address:
    	
Cahill Gordon &   Reindel LLP
    
	
 
    	
80 Pine St.
    
	
 
    	
New York
    
	
 
    	
New York 10005
    
	
 
    	
 
    
	
Attention:
    	
John Schuster, Esq.
    
	
Facsimile:
    	
+1 (212) 269-5420;
    

 

34.2.2       in the case of each Lender, that notified in writing to the Agent on or prior to the date on which it becomes a Party; and

 

34.2.3       in the case of the Agent, to:

 

	
Address:
    	
Wholesale Loans   Servicing Agency Operations
    
	
 
    	
Lloyds TSB Bank plc
    
	
 
    	
CityMark
    
	
 
    	
150 Fountainbridge
    
	
 
    	
Edinburgh EH3 9PE
    
	
 
    	
 
    
	
Fax:
    	
+44 (0)20 7158 3204
    
	
Attention:
    	
Wholesale Loans   Servicing Agency Operations;
    

 

34.2.4       in the case of the Security Trustee, to:

 

	
Address:
    	
Wholesale Loans   Agency
    
	
 
    	
Lloyds TSB Bank plc
    
	
 
    	
10 Gresham Street
    
	
 
    	
London EC2V 7AE
    
	
 
    	
 
    
	
Fax:
    	
+44 (0)20   7158 3198
    
	
Attention:
    	
Wholesale Loans   Agency,
    

 

or any substitute address or fax number or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days’ notice.

 

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34.3       Delivery

 

34.3.1       Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

 

(a)       if by way of fax, when received in legible form; or

 

(b)       if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

 

and, if a particular department or officer is specified as part of its address details provided under Clause 34.2 (Addresses), if addressed to that department or officer.

 

34.3.2       Any communication or document to be made or delivered to the Agent or to the Security Trustee will be effective only when actually received by the Agent or the Security Trustee and then only if it is expressly marked for the attention of the department or officer identified with the Agent’s or the Security Trustee’s signature below (or any substitute department or officer as the Agent shall specify for this purpose).

 

34.3.3       All notices from or to an Obligor shall be sent through the Agent.

 

34.3.4       Any communication or document made or delivered to the Original Borrower in accordance with this Clause will be deemed to have been made or delivered to each Guarantor.

 

34.3.5       All notices to a Lender from the Security Trustee shall be sent through the Agent.

 

34.4       Notification of address and fax number

 

Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 34.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other Parties.

 

34.5       Electronic communication

 

34.5.1       Any communication to be made between the Agent or the Security Trustee and a Lender under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent, the Security  Trustee and the relevant Lender:

 

(a)       agree that, unless and until notified to the contrary, this is to be an accepted form of communication;

 

(b)       notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

 

(c)       notify each other of any change to their address or any other such information supplied by them.

 

124

 

34.5.2       Any electronic communication made between the Agent and a Lender or the Security Trustee will be effective only when actually received in readable form and in the case of any electronic communication made by a Lender to the Agent or the Security Trustee only if it is addressed in such a manner as the Agent or Security Trustee shall specify for this purpose.

 

34.6       English language

 

34.6.1       Any notice given under or in connection with any Finance Document must be in English.

 

34.6.2       All other documents provided under or in connection with any Finance Document must be:

 

(a)       in English; or

 

(b)       if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

 

35.         CALCULATIONS AND CERTIFICATES

 

35.1       Accounts

 

In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.

 

35.2       Certificates and Determinations

 

Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

 

35.3       Day count convention

 

Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.

 

36.         PARTIAL INVALIDITY

 

If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

 

37.         REMEDIES AND WAIVERS

 

No failure to exercise, nor any delay in exercising, on the part of any Secured Party or the Arranger, any right or remedy under the Finance Documents shall operate as a waiver of any such right or remedy or constitute an election to affirm any of the Finance 

 

125

 

Documents. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy.  The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law.

 

38.         COUNTERPARTS

 

This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.

 

39.         AMENDMENTS AND WAIVERS

 

39.1       Required consents

 

39.1.1       Subject to Clause 39.2 (Exceptions) and Clause 28.17 (Releases) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Obligors and any such amendment or waiver will be binding on all Parties.

 

39.1.2       The Agent, or in respect of the Security Documents the Security Trustee, may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause.

 

39.2       Exceptions

 

39.2.1       An amendment or waiver that has the effect of changing or which relates to:

 

(a)       Clause 30 (Sharing Among the Finance Parties) or this Clause 39;

 

(b)       the definition of “Majority Lenders” or “Super Majority Lenders” in Clause 1.1 (Definitions);

 

(c)       a change to the Obligors other than in accordance with Clause 26 (Changes to the Obligors);

 

(d)       an extension to the date of payment of any amount under the Finance Documents;

 

(e)       a reduction in the amount of any payment of principal, interest, fees or commission payable;

 

(f)        an increase in or an extension of any Commitment;

 

(g)       Clause 2.8 (Several Rights), Clause 9 (Collateralisation And Redesignation Of Letters Of Credit), Clause 19 (Guarantee and Indemnity), Clause 25 (Changes to the Lenders) or Clause 26 (Changes to the Obligors);

 

(h)       any provision which expressly contemplates the need for the consent or approval of all the Lenders;

 

(i)        a material change to the nature or scope of the Charged Property or the manner in which the proceeds of enforcement of the Transaction Security are distributed;

 

126

 

(j)        the release of all or substantially all of the Transaction Security other than in accordance with the Security Documents; or

 

(k)       any material change to the definition of “Advance Rate”, “Borrowing Base” or “Eligible Securities” in Clause 1.1 (Definitions) or any material change to Schedule 9 (Eligible Collateral Table) or the proviso set out in Clause 3.1 (Utilisation Conditions for the Facility),

 

shall not be made without the prior consent of all the Lenders.

 

39.2.2       An amendment or waiver which relates to the rights or obligations of the Agent, the Security Trustee or the Arranger may not be effected without the consent of the Agent, the Security Trustee or the Arranger as the case may be.

 

39.2.3       Notwithstanding the foregoing or any other provision of this Agreement, any provision of this Agreement may be amended by an agreement in writing entered into by the Original Guarantor, the Super-Majority Lenders and the Agent if:

 

(a)       by the terms of such agreement, the Commitment of each Lender not consenting to the amendment provided for therein shall terminate (it being understood that the Original Guarantor may cause the Commitment of any such non-consenting Lender to be transferred to one or more new Lenders in accordance with Clause 25 (Changes to the Lenders) provided that no action shall be required to be taken by such non-consenting Lender (including the execution of any Transfer Certificate)); and

 

(b)       at the time such amendment becomes effective, each Lender not consenting thereto receives payment in full of all amounts owing to it or accrued for its account under any Finance Document.

 

39.3       Exceptions

 

Notwithstanding any other provisions in this Clause 39, the Agent shall not be obliged  to agree to any such amendment or waiver if the same would:

 

39.3.1       amend or waive this Clause 39, Clause 17 (Costs and Expenses) or Clause 27 (Role of the Agent and the Arranger); or

 

39.3.2       otherwise amend or waive any of the Agent’s rights hereunder or subject the Agent or the Arrangers to any additional obligations hereunder.

 

40.         COUNTERPARTS

 

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

 

127

 

SECTION 12

GOVERNING LAW AND ENFORCEMENT

 

41.         GOVERNING LAW

 

This Agreement and all non-contractual obligations arising out of or in connection with it are governed by English law.

 

42.         ENFORCEMENT

 

42.1       Jurisdiction

 

42.1.1       The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a “Dispute”).

 

42.1.2       The parties hereto agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party to this Agreement will argue to the contrary.

 

42.1.3       This Clause 42.1 is for the benefit of the Finance Parties only.  As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction.  To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.

 

42.2       Service of Process

 

Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in England and Wales):

 

42.2.1       irrevocably appoints Talbot Underwriting Services Limited as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and

 

42.2.2       agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned.

 

43.         CONFIDENTIALITY

 

43.1       Confidential Information

 

Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 43.2 (Disclosure of Confidential Information) and Clause 43.3 (Disclosure to numbering service providers), and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.

 

43.2       Disclosure of Confidential Information

 

Any Finance Party may disclose:

 

(a)             to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to  be given pursuant to this paragraph (a) is informed in writing of its confidential 

 

128

 

nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

 

(b)            to any person:

 

(i)        to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents and to any of that person’s Affiliates, Related Funds, Representatives and professional advisers;

 

(ii)       with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Obligors and to any of that person’s Affiliates, Related Funds, Representatives and professional advisers;

 

(iii)      appointed by any Finance Party or by a person to whom paragraph (b)(i) or (ii) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under sub-clause 27.13.3 of Clause 27.13 (Relationship with the Lenders));

 

(iv)      who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in paragraph (b)(i) or (b)(ii) above;

 

(v)       to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;

 

(vi)      to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 25.7 (Security over Lenders’ rights);

 

(vii)     to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;

 

(viii)    who is a Party; or

 

(ix)      with the consent of the Original Guarantor,

 

in each case, such Confidential Information as that Finance Party shall  consider appropriate if:

 

(1)       in relation to paragraphs (b)(i), (b)(ii) and b(iii) above, the person to 

 

129

 

whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;

 

(2)       in relation to paragraph (b)(iv) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;

 

(3)       in relation to paragraphs (b)(v), (b)(vi) and (b)(vii) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances,

 

(c)             to any person appointed by that Finance Party or by a person to whom paragraph (b)(i) or (b)(ii) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered into a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Original Guarantor and the relevant Finance Party;

 

(d)            to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Obligors if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information.

 

43.3       Disclosure to numbering service providers

 

(a)             Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facility and/or one or more Obligors the following information:

 

(i)        names of Obligors;

 

(ii)       country of domicile of Obligors;

 

130

 

(iii)      place of incorporation of Obligors;

 

(iv)      date of this Agreement;

 

(v)       the names of the Agent and the Arranger;

 

(vi)      date of each amendment and restatement of this Agreement;

 

(vii)     amount of Total Commitments;

 

(viii)    currency of the Facility;

 

(ix)      type of Facility;

 

(x)       ranking of Facility;

 

(xi)      termination date for Facility;

 

(xii)     changes to any of the information previously supplied pursuant to paragraphs (i) to (xi) above; and

 

(xiii)    such other information agreed between such Finance Party and the Original Guarantor,

 

to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

 

(b)            The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facility and/or one or more Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.

 

(c)             Each Obligor represents that none of the information set out in paragraphs (i) to (xiii) of paragraph (a) above is, nor will at any time be, unpublished price-sensitive information.

 

(d)            The Agent shall notify the Original Guarantor and the other Finance Parties of:

 

(i)        the name of any numbering service provider appointed by the Agent in respect of this Agreement, the Facility and/or one or more Obligors; and

 

(ii)       the number or, as the case may be, numbers assigned to this Agreement, the Facility and/or one or more Obligors by such numbering service provider.

 

43.4       Entire agreement

 

This Clause 43 (Confidentiality) constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

 

131

 

43.5       Inside information

 

Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.

 

43.6       Notification of disclosure

 

Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Original Guarantor:

 

43.6.1       of the circumstances of any disclosure of Confidential Information made pursuant to paragraph (b)(v) of Clause 43.2 (Disclosure of Confidential Information) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and

 

43.6.2       upon becoming aware that Confidential Information has been disclosed in breach of this Clause 43 (Confidentiality).

 

43.7       Continuing obligations

 

The obligations in this Clause 43 (Confidentiality) are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of twelve months from the earlier of:

 

43.7.1       the date on which all amounts payable by the Obligors under or in connection with this Agreement have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and

 

43.7.2       the date on which such Finance Party otherwise ceases to be a Finance Party.

 

AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written.

 

132

 

SCHEDULE 1

THE ORIGINAL LENDERS

 

	
Lender
    	
 
    	
Commitment ($)
    
	
ING Bank N.V., London Branch
    	
 
    	
12,500,000
    
	
 
    	
 
    	
 
    
	
Lloyds TSB Bank plc
    	
 
    	
12,500,000
    
	
 
    	
 
    	
 
    
	
Total
    	
 
    	
25,000,000
    

 

133

 

SCHEDULE 2

CONDITIONS PRECEDENT

 

Part A 
 Conditions precedent to initial Utilisation

 

1.           Corporate Documents

 

(a)                                      A copy of the constitutional documents of each Original Obligor and each other member of the Group that is party to a Finance Document.

 

(b)                                     A copy of a resolution of the board of directors of each Original Obligor and each other member of the Group that is party to a Finance Document:

 

(i)        approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance Documents to which it is a party;

 

(iii)     authorising a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and

 

(iv)      authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilisation Request) to be signed and/or despatched by it under or in connection with the Finance Documents to which it is a party.

 

(c)                                      A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above.

 

(d)                                     A certificate of the Original Guarantor (signed by a director or officer of the Original Guarantor) confirming that neither the execution, delivery and performance by the Original Guarantor or any of its subsidiaries that is party to any Finance Document of this Agreement or the other Finance Documents to which it is a party nor compliance with the terms and provisions thereof, nor the consummation of the transactions contemplated therein:

 

(i)        will contravene any applicable provision of any law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality;

 

(ii)      will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (other than Liens in favour of the Security Trustee pursuant to the Security Documents) upon any of its property or assets or those of any of its subsidiaries pursuant to the terms of any material indenture, mortgage, deed of trust, loan agreement, credit agreement or any other material instrument to which it or any of its subsidiaries is a party or by which it or any of its property or assets are bound or to which 

 

134

 

it may be subject; or

 

(iii)     will violate any provision of its certificate of incorporation, by-laws or other organisational documents, nor those of its subsidiaries.

 

(e)                                      A copy of a resolution of the Original Guarantor in its capacity as holder of the outstanding shares of Validus Reinsurance, Ltd., approving the terms of, and the transactions contemplated by, the Security Agreement and the Control Agreement.

 

(f)                                        A certificate of the Original Guarantor (signed by a director or officer of the Original Guarantor) certifying that each copy document delivered to the Agent pursuant to paragraphs 1(a), 1(b), 1(e) and 4(c) of this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.

 

2.           Security Documents

 

(a)                                      The Security Agreement and Account Control Agreement duly executed by the relevant Original Obligors, Validus Reinsurance, Ltd., the Custodian, the Special Report Agent and the Security Trustee.

 

(b)                                     A copy of all documents and instruments, including UCC financing statements where applicable, required by law in each applicable jurisdiction or reasonably requested by the Agent to be filed, registered or recorded to create and perfect the Liens intended to be created under the Security Agreement.

 

(c)                                      A copy of the results of a recent search of the UCC (or equivalent) filings made with respect to each Original Obligor in the jurisdictions contemplated in paragraph (b) above (including Washington, D.C., and Bermuda) and in such other jurisdictions in which Collateral is located which may be reasonably requested by the Agent, and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Agent that the Liens indicated by such financing statements (or similar documents) are permitted under the terms of the Finance Documents or have been released.

 

3.           Legal opinions

 

(a)                                      A legal opinion of Clifford Chance LLP, legal advisers to the Arranger and the Agent in England, substantially in the form distributed to the Original Lenders prior to signing this Agreement.

 

(b)                                     A legal opinion of Clifford Chance LLP, legal advisers to the Arranger and the Agent in New York, substantially in the form distributed to the Original Lenders prior to signing this Agreement.

 

(c)                                      A legal opinion of Conyers, Dill & Pearman, legal advisers to the Arranger and the Agent in Bermuda, substantially in the form distributed to the Original Lenders prior to signing this Agreement.

 

135

 

4.           Other documents and evidence

 

(a)                                      Evidence that any agent for service of process referred to in Clause 42.2 (Service of process), if not an Original Obligor, has accepted its appointment.

 

(b)                                     A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable (if it has notified the Original Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Finance Document or for the validity and enforceability of any Finance Document.

 

(c)                                      The Original Financial Statements.

 

(d)                                     The executed Fee Letters.

 

(e)                                      A copy of all necessary governmental or regulatory consents required by each Original Obligor and each other member of the Group in relation to the security contained in the Security Documents (including any governmental or regulatory consents required from the Bermuda Monetary Authority or the UK Financial Services Authority).

 

(f)                                        Evidence that as at a date no earlier than the date of this Agreement, the value of the Own FAL of the Account Party is no less than $300,000,000.

 

(g)                                     A statement provided by the Bank of New York in relation to the value of the collateral in the Collateral Accounts as of the date of this Agreement.

 

(h)                                     Evidence that Validus Reinsurance, Ltd. has an A.M. Best financial strength rating of at least “A-”.

 

(i)                                         The Business Plan.

 

(j)                                         Evidence that all amounts outstanding under the Existing Facility have been or will be repaid in full and all commitments and liabilities thereunder have been irrevocably cancelled and discharged, on or before the first Utilisation Date.

 

(k)                                      Evidence that any Security issued in respect of the Existing Facility shall be released on or before the first Utilisation Date.

 

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Part B 

Conditions precedent required to be delivered by an Additional Obligor

 

1.           Corporate Documents

 

(a)                                      A copy of the constitutional documents of the Additional Obligor.

 

(b)                                     A copy of a resolution of the board of directors of the Additional Obligor:

 

(i)       approving the terms of, and the transactions contemplated by, the Obligor Accession Letter and the Finance Documents and resolving that it execute, deliver and perform the Obligor Accession Letter and any other Finance Document to which it is party;

 

(ii)      authorising a specified person or persons to execute the Obligor Accession Letter and other Finance Documents on its behalf; and

 

(iii)     authorising a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices (including, in relation to an Additional Borrower, any Utilisation Request) to be signed and/or despatched by it under or in connection with the Finance Documents to which it is a party.

 

(c)                                      A specimen of the signature of each person authorised by the resolution referred to in paragraph (b)(iii) above.

 

(d)                                     A copy of a resolution signed by all the holders of the issued shares of the Additional Guarantor, approving the terms of, and the transactions contemplated by, the Finance Documents to which the Additional Guarantor is a party.

 

(e)                                      A copy of a resolution of the board of directors of each corporate shareholder of each Additional Guarantor approving the terms of the resolution referred to in paragraph (d) above.

 

(f)                                        A certificate of the Additional Obligor (signed by a director) confirming that borrowing or guaranteeing or securing, as appropriate, the Total Commitments would not cause any borrowing, guarantee, security or similar limit binding on it to be exceeded.

 

(g)                                     A certificate of an authorised signatory of the Additional Obligor certifying that each copy document listed in this Part B of Schedule 2 is correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than the date of the Obligor Accession Letter.

 

2.           Legal opinions

 

(a)                                      A legal opinion of Clifford Chance LLP, legal advisers to the Agent in England, substantially in the form distributed to the Lenders prior to signing the Obligor Accession Letter.

 

137

 

(b)                                     A legal opinion of the legal advisers to the Agent in the jurisdiction of incorporation of the Additional Obligor, substantially in the form distributed to the Lenders prior to signing the Obligor Accession Letter.

 

3.           Other documents and evidence

 

(a)                                      An Obligor Accession Letter executed by the Additional Obligor and the Original Guarantor.

 

(b)                                     If available, the latest audited financial statements of the Additional Obligor.

 

(c)                                      A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable in connection with the entry into and performance of the transactions contemplated by the Obligor Accession Letter or for the validity and enforceability of any Finance Document.

 

(d)                                     If the proposed Additional Obligor is incorporated in a jurisdiction other than England and Wales, evidence that the process agent specified in Clause 42.2 (Service of process), if not an Obligor, has accepted its appointment in relation to the proposed Additional Obligor.

 

138

 

SCHEDULE 3

FORM OF UTILISATION REQUEST

 

From:      Talbot Holdings Ltd.

 

To:          [Agent]

 

Dated:

 

Dear Sirs,

 

1.           We refer to an agreement (the “Credit Agreement”) dated 28 November 2007 (as, from time to time, amended, restated, varied, novated or supplemented) and made between Talbot Holdings Ltd. as borrower, Validus Holdings, Ltd. as guarantor, ING Bank N.V., London Branch and Lloyds TSB Bank plc as mandated lead arrangers, Lloyds TSB Bank plc as agent and security trustee, the financial institutions defined therein as Lenders and others.

 

2.           Terms defined in the Credit Agreement shall have the same meaning in this notice.

 

3.           This notice is irrevocable.

 

4.           We hereby give you notice that, pursuant to the Credit Agreement we wish the Lenders to issue a Letter of Credit as follows:

 

(a)             Face amount:                                         [$/£][      ]

 

(b)            Utilisation Date:                    [               ]

 

(c)             Term:                                                       [               ]

 

(d)            Expiry Date:                                           [               ]

 

5.           We would like this Letter of Credit to be denominated in [sterling/dollars].

 

6.           We confirm that, at the date hereof, the Repeated Representations are true in all material respects and no Default is continuing.

 

7.           The Letter of Credit should be issued in favour of Lloyd’s in the form attached and delivered to the recipient at [address of recipient].  The purpose of its issue is [·].

 

	
 
    	
Yours faithfully
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Authorised Signatory
    	
 
    
	
 
    	
for and on behalf of
    	
 
    
	
 
    	
Talbot   Holdings Ltd.
    	
 
    

 

139

 

SCHEDULE 4

FORM OF TRANSFER CERTIFICATE

 

To:          Lloyds TSB Bank plc

 

TRANSFER CERTIFICATE

 

relating to the agreement (as, from time to time, amended, restated, varied, novated or supplemented, the “Credit Agreement”) dated 28 November 2007 whereby a letter of credit facility was made available to Talbot Holdings Ltd. as borrower by a group of banks on whose behalf Lloyds TSB Bank plc acted as agent in connection therewith.

 

1.           Terms defined in the Credit Agreement shall, subject to any contrary indication, have the same meanings herein.  The terms Lender, Transferee and Portion Transferred are defined in the schedule hereto.

 

2.           The Lender (a) confirms that the details in the schedule hereto under the heading “Letters of Credit” accurately summarises its participation in the Credit Agreement and the Term of any existing Letters of Credit and (b) requests the Transferee to accept and procure the transfer by novation to the Transferee of the Portion Transferred (specified in the schedule hereto) of its Commitment and/or its participation in such Letters of Credit by counter-signing and delivering this Transfer Certificate to the Agent at its address for the service of notices specified in the Credit Agreement.

 

3.           The Transferee hereby requests the Agent to accept this Transfer Certificate as being delivered to the Agent pursuant to and for the purposes of Clause 25 (Changes to the Lenders) of the Credit Agreement so as to take effect in accordance with the terms thereof on the Transfer Date or on such later date as may be determined in accordance with the terms thereof.

 

4.           The Transferee confirms that it has received a copy of the Credit Agreement together with such other information as it has required in connection with this transaction and that it has not relied and will not hereafter rely on the Lender to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of any such information and further agrees that it has not relied and will not rely on the Lender to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Obligors or any other member of the Group that is party to a Finance Document.

 

5.           The Transferee hereby undertakes with the Lender and each of the other parties to the Credit Agreement that it will perform in accordance with their terms all those obligations which by the terms of the Finance Documents will be assumed by it after delivery of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect.

 

6.           The Lender makes no representation or warranty and assumes no responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any document relating thereto and assumes no responsibility for the financial condition of the Obligors or any other member of the Group that is party to a 

 

140

 

Finance Document or for the performance and observance by the Obligors or any other member of the Group that is party to a Finance Document of any of its obligations under the Finance Documents or any document relating thereto and any and all such conditions and warranties, whether express or implied by law or otherwise, are hereby excluded.

 

7.           The Lender hereby gives notice that nothing herein or in the Finance Documents (or any document relating thereto) shall oblige the Lender to (a) accept a re-transfer from the Transferee of the whole or any part of its rights, benefits and/or obligations under the Finance Documents transferred pursuant hereto or (b) support any losses directly or indirectly sustained or incurred by the Transferee for any reason whatsoever including the non-performance by an Obligor or any other party to the Finance Documents (or any document relating thereto) of its obligations under any such document.  The Transferee hereby acknowledges the absence of any such obligation as is referred to in (a) or (b) above.

 

8.           This Transfer Certificate, the rights, benefits and obligations of the parties hereunder and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English law.

 

141

 

THE SCHEDULE

 

	
1.
    	
Lender:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Transferee:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Transfer Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Lender’s Participation in the Facility:
    	
 
    	
 
    
	
 
    	
Lender’s Commitment
    	
 
    	
Portion Transferred
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Letter(s) of Credit
    	
Term and
    	
Portion Transferred
    
	
 
    	
Lender’s Participation
    	
Expiry Date
    	
 
    

 

 

	
[Transferor   Lender]
    	
[Transferee   Lender]
    
	
 
    	
 
    
	
By:
    	
By:
    
	
 
    	
 
    
	
Date:
    	
Date:
    

 

ADMINISTRATIVE DETAILS OF TRANSFEREE

 

Address:

 

Contact Name:

 

Account for Payments

in sterling:

 

Fax:

 

Telephone:

 

142

 

SCHEDULE 5

FORM OF CREDIT INSTITUTION CONFIRMATION

 

[Letterhead of Agent]

 

	
To:
    	
The Society and Council of Lloyd’s
    
	
 
    	
c/o The Manager, Market Services
    
	
 
    	
Fidentia House
    
	
 
    	
Walter Burke Way
    
	
 
    	
Chatham Maritime
    
	
 
    	
Chatham, Kent ME4 4TU
    

 

Date:       [·]

 

We, Lloyds TSB Bank plc, (the “Agent”) acting as agent on behalf of each of [name of each bank participating in the Letter of Credit] (the “Lenders”), hereby confirm the following:

 

(a)         We have provided a multi bank Letter of Credit as agent on behalf of the Lenders which will be included in the Lloyd’s Deposit of [·] (the “Corporate Member”).

 

(b)         The execution and delivery by the Agent of the Letter of Credit has been duly authorised by all necessary action on the part of the Lenders and the Letter of Credit has been duly executed and delivered by the Agent on behalf of the Lenders.

 

(c)         The obligations of the Lenders under the Letter of Credit constitute legal, valid and binding obligations.

 

 

	
 
    	
 
    
	
 
    	
 
    
	
Signature of Authorised   Signature
    	
 
    
	
For and on behalf of Lloyds TSB Bank plc
    	
 
    
	
acting as Agent on behalf   of the Lenders
    	
 
    

 

143

 

SCHEDULE 6

FORM OF LETTER OF CREDIT

 

	
To:
    	
The Society and the Council of Lloyd’s,
    
	
 
    	
c/o The Manager, Market Services
    
	
 
    	
Fidentia House
    
	
 
    	
Walter Burke Way
    
	
 
    	
Chatham Maritime
    
	
 
    	
Chatham, Kent ME4 4TU
    

 

Dated                 (1)

 

Dear Sirs:

 

Irrevocable Standby Letter of Credit No. [·]

 

Re:  [Name of Corporate Member of Lloyd’s] (the “Applicant”)

 

This Clean Irrevocable Standby Letter of Credit (the “Credit”) is issued by the banks whose names are set out in Schedule 1 hereto (the “Issuing Lenders”, and each an “Issuing Lender”) in favour of the Society of Lloyd’s (“Lloyd’s”) on the following terms:

 

1.           Subject to the terms hereof, the Issuing Lenders shall make payments within two business days of demand of Lloyds TSB Bank plc (the “Agent”) in accordance with paragraph 4 below.

 

2.           Upon a demand being made by Lloyd’s pursuant to paragraph 4 below each Issuing Lender shall pay that proportion of the amount demanded which is equal to the proportion which its Commitment set out in Schedule 1 hereto bears to the aggregate Commitments of all the Issuing Lenders set out on Schedule 1 hereto provided that the obligations of the Issuing Lenders under this Credit shall be several and no Issuing Lender shall be required to pay an amount exceeding its Commitment set out in Schedule 1 hereto and the Issuing Lenders shall not be obliged to make payments hereunder in aggregate exceeding a maximum amount of [£/$][·]. Any payment by an Issuing Lender hereunder shall be made in sterling to Lloyd’s account specified in the demand made by Lloyd’s pursuant to paragraph 4 below.

 

3.           This Credit is effective from [·] (the “Commencement Date”) and will expire on the Final Expiration Date.  This Credit shall remain in force until we give you not less than four years notice in writing terminating the same on the later of (a) the fourth anniversary of the Commencement Date and (b) any date subsequent to 31 December [2015/2016] as specified in such notice (the “Final Expiration Date”), our notice to be sent by registered mail for the attention of the General Manager, Members’ Financial Services, at the above address.

 

4.             Subject to paragraph 3 above, the Issuing Lenders shall pay to Lloyd’s under this Credit 

 

(1)           Date of Letter of Credit.

 

144

 

upon presentation of a demand by Lloyd’s on the Agent, Lloyds TSB Bank plc at [·], marked for the attention of [·] substantially in the form set out in Schedule 4 (Form of Transfer Certificate) hereto the amount specified therein (which amount shall not, when aggregated with all other amounts paid by the Issuing Lenders to Lloyd’s under this Credit, exceed the maximum amount referred to in paragraph 2 above).

 

5.           The Agent has signed this Credit as agent for disclosed principals and accordingly shall be under no obligation to Lloyd’s hereunder other than in its capacity as an Issuing Lender.

 

6.           All charges are for the Applicant’s account.

 

7.           Subject to any contrary indication herein, this Credit is subject to the International Standby Practices — ISP98 (1998 publication — International Chamber of Commerce Publication No. 590).

 

8.           This Credit shall be governed by and interpreted in accordance with English law and the Issuing Lenders hereby irrevocably submit to the jurisdiction of the High Court of Justice in England.

 

9.           Each of the Issuing Lenders engages with Lloyd’s that demands made under and in compliance with the terms of this Credit will be duly honoured on presentation.

 

	
 
    	
Yours   faithfully,
    
	
 
    	
 
    
	
 
    	
LLOYDS TSB BANK PLC
    
	
 
    	
as   agent
    
	
 
    	
 
    
	
 
    	
for   and on behalf of
    
	
 
    	
[Names of all Issuing Lenders including Agent]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
 
    
	
 
    	
Title:
    

 

145

 

Issuing Lenders’ Commitments

 

	
Name and Address of Issuing Lender
    	
 
    	
Commitment
    	
 
    
	
 
    	
 
    	
([Sterling/Dollars])
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total   Value
    	
 
    	
 
    	
 
    

 

146

 

Form of Demand ([Pounds Sterling/Dollars])

 

[on Lloyd’s letterhead]

 

Dear Sir/Madam

 

THE SOCIETY OF LLOYD’S

 

SECURITY TRUSTEE OF

 

LETTER OF CREDIT NO.

 

With reference to the above, we enclose for your attention a Bill of Exchange, together with the respective Letter of Credit.  Payment should be made by way of [CHAPS/SWIFT].  The account details are as follows:

 

[For Letters of Credit denominated in U.S. Dollars:]

 

	
[National Westminster Bank
    	
Sort Code: 60-00-01
    
	
1   Princes Street
    	
SWIFT   Code: NWBKGB2L
    
	
London   EC2R 8PA
    	
IBAN   No: GB87NWBK60730140120066
    

 

Account Name: Corporation of Lloyd’s Members Trust Clients Money Account]

 

[For Letters of Credit denominated in sterling:]

 

	
[National Westminster Bank Plc
    	
Sort Code 60-00-01
    
	
City   of London Office
    	
Account   13637444
    
	
P.O. Box   12258
    	
 
    
	
1   Princes Street
    	
 
    
	
London   EC2R 8AP]
    	
 
    

 

Please quote Member Code:

 

	
 
    	
Yours   faithfully,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
for   Manager
    
	
 
    	
Members’   Funds Department
    
	
 
    	
Members’   Services Unit
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

147

 

Your ref:

 

Our ref:      MEM/    /     /      /C911f

 

Extn:

 

BILL OF EXCHANGE

 

The Society of Lloyd’s

 

Security Trustee of

 

Letter of Credit No.

 

Please pay in accordance with the terms of the Letter of Credit to our order the amount of [£/$]                        .

 

	
 
    	
For   and on behalf of
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Authorised   Signatory
    
	
 
    	
 
    
	
 
    	
Members’   Funds Department
    

 

To:          [insert name of bank/credit institution]
 as the Agent

 

148

 

SCHEDULE 7

MANDATORY COSTS RATE

 

1.           The Mandatory Costs Rate is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.

 

2.           On the first day of each Term (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each Lender, in accordance with the paragraphs set out below.  The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Unpaid Sum) and will be expressed as a percentage rate per annum.

 

3.           The Additional Cost Rate for any Lender lending from a Facility Office in a participating member state will be the percentage notified by that Lender to the Agent.  This percentage will be certified by that Lender in its notice to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender’s participation in all Unpaid Sums made from that Facility Office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that Facility Office.

 

4.           The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Agent as follows:

 

(a)             in relation to a sterling Unpaid Sum:

 

 

(b)            in relation to an Unpaid Sum in any currency other than sterling:

 

 

Where:

 

A              is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.

 

B               is the percentage rate of interest (excluding the Mandatory Costs Rate and the additional rate of interest specified in Clause 18.2 (Default interest) payable on any Unpaid Sum) payable for the relevant Interest Period on the Unpaid Sum.

 

C               is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.

 

149

 

D               is the percentage rate per annum payable by the Bank of England to the Agent on interest bearing Special Deposits.

 

E               is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Agent pursuant to paragraph 7 below and expressed in pounds per £1,000,000.

 

5.           For the purposes of this Schedule:

 

(a)             “Eligible Liabilities” and “Special Deposits” have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;

 

(b)            “Fees Rules” means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;

 

(c)             “Fee Tariffs” means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and

 

(d)            “Tariff Base” has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.

 

6.           In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the formula as 5 and not as 0.05).  A negative result obtained by subtracting D from B shall be taken as zero.  The resulting figures shall be rounded to four decimal places.

 

7.           If requested by the Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Agent, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of that Reference Bank.

 

8.           Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate.  In particular, but without limitation, each Lender shall supply the following information on or prior to the date on which it becomes a Lender:

 

(a)             the jurisdiction of its Facility Office; and

 

(b)            any other information that the Agent may reasonably require for such purpose.

 

Each Lender shall promptly notify the Agent of any change to the information provided by it pursuant to this paragraph.

 

150

 

9.           The percentages of each Lender for the purpose of A and C above and the rates of charge of each Reference Bank for the purpose of E above shall be determined by the Agent based upon the information supplied to it pursuant to paragraphs 7 and 8 above and on the assumption that, unless a Lender notifies the Agent to the contrary, each Lender’s obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office.

 

10.         The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.

 

11.         The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7 and 8 above.

 

12.         Any determination by the Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all parties.

 

13.         The Agent may from time to time, after consultation with the Original Borrower and the Lenders, determine and notify to all parties any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all parties.

 

151

 

SCHEDULE 8

LETTER OF COMFORT

 

[on Lloyd’s letterhead]

 

Dear Sir/Madam

 

I understand that Talbot Holdings Ltd. on behalf of itself and the underwriting subsidiary of Talbot Holdings Ltd. named Talbot 2002 Underwriting Capital Ltd. (the”Corporate  Member”) has procured or may procure the provision to Lloyd’s of one or more letters of credit, each with a commencement date of [·], having a maximum aggregate value of up to [$/£][·] to form part of their Funds at Lloyd’s (the “LTSB L/C”).  [The LTSB L/C is to replace the letters of credit currently provided to Lloyd’s in respect of the Corporate Members which total [$/£] [·]].

 

You have asked whether, in the event of monies having to be applied out of the Corporate Member’s Funds at Lloyd’s, the letters of credit and other Funds at Lloyd’s of the Corporate Member may be drawn down in a pre-determined order whereby any drawdown on the LTSB L/C would not be made until such time as all other of the Corporate Member’s Funds at Lloyd’s had been applied.

 

As you are aware, the letters of credit are held by Lloyd’s in its capacity as Security Trustee under the terms of the Security and Trust Deed (substantially in the form STD (CM) G93 CM 123) entered into by the Corporate Member.  Any decision to draw down on any letter of credit involves an exercise of discretion in the light of the circumstances prevailing at the relevant time, and thus no binding undertaking can be given now.

 

However, I can confirm that at the time of considering the drawdown of the Corporate Member’s Funds at Lloyd’s, Lloyd’s would take into account the requested order of drawdown set out in the second paragraph of this letter.

 

For the avoidance of doubt, Lloyd’s shall not be responsible to you or any other person for any losses incurred by you or such other person as a consequence of acting in reliance upon this letter.

 

Yours faithfully

 

152

 

SCHEDULE 9

ELIGIBLE COLLATERAL TABLE

 

	
 
    	
 
    	
Advance Rate
    
	
Collateral Description
    	
 
    	
Matching Currency*
    	
 
    	
Non-Matching Currency*
    
	
Cash: 

U.S. Dollars or Sterling, including time   deposits, certificates of deposit and money market deposits held at Bank of   New York, as custodian, or that are subject to a first priority security   interest of the Agent or Security Trustee.
    	
 
    	
100%.
    	
 
    	
95%.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
U.S. Government Securities:  

Securities issued or directly and fully   guaranteed or insured by the US or any agency or instrumentality thereof   (provided that the full faith and credit of the US is pledged in support   thereof), including assets issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage   Corporation, Federal Home Loan Bank or the Government National Mortgage   Association.
    	
 
    	
With maturities of (x) two years or less   from the date of acquisition, 95%, and (y) more than two years to ten   years from the date of acquisition, 90%.
    	
 
    	
With maturities of (x) two years or less   from the date of acquisition, 90%, and (y) more than two years to ten   years from the date of acquisition, 85%
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Investment Grade Municipal Bonds:  

Municipal Bonds rated at least (i) A by   S&P and (ii) A2 by Moody’s and maturing within five years from the   date of acquisition.
    	
 
    	
85%.
    	
 
    	
80%.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Investment Grade Non-Convertible U.S.   Corporate Bonds:  

Non-convertible corporate bonds issued by any   entity organised in the US which are “publicly traded” on a nationally   recognised exchange, eligible to be settled by DTC and rated at least   (i) AA- by S&P and (ii) Aa3 by Moody’s. Such Collateral cannot   represent more than 50 per cent. of the Borrowing Base and where provided by   an individual issuer is limited to an amount of 5 per cent. of the Borrowing   Base.
    	
 
    	
With maturities of (x) two years or less   from the date of acquisition, 90% and (y) more than two years to ten   years from the date of acquisition, 85%.
    	
 
    	
With maturities of (x) two years or less   from the date of acquisition, 85% and (y) more than two years to ten   years from the date of acquisition, 80%.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
UK Government Securities:  

Securities issued by the United Kingdom   government.
    	
 
    	
With maturities of (x) two years or less   from the date of acquisition, 95%, and (y) more than two years to ten   years from the date of acquisition, 90%.
    	
 
    	
With maturities of (x) two years or less   from the date of acquisition, 90%, and (y) more than two years to ten   years from the date of acquisition, 85%.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
OECD Sovereign Debt:  

Debt issued or guaranteed by Canada, France   or Germany and rated at least (i) AA- by S&P and (ii) Aa3 by   Moody’s.
    	
 
    	
With maturities of (x) two years or less   from the date of acquisition, 95%, and (y) more than two years to ten   years from the date of acquisition, 90%.
    	
 
    	
With maturities of (x) two years or less   from the date of acquisition, 90%, and (y) more than two years to ten   years from the date of acquisition, 85%.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Other Securities:  

All other investments, obligations or   securities.
    	
 
    	
0.0%.
    	
 
    	
0.0%.
    

 

*    For the avoidance of doubt, in respect of any calculation relating to a Letter of Credit, “Matching Currency” is a reference to Collateral denominated in the same currency as the relevant Letter of Credit and “Non-Matching Currency” is a reference to Collateral denominated in any other currency.

 

153

 

SCHEDULE 10

FORM OF BORROWING BASE CERTIFICATE

 

	
To:
    	
Lloyds TSB Bank plc
    
	
 
    	
as Agent under the Credit   Agreement referred to below
    

 

[Date]

 

Ladies and Gentlemen:

 

Pursuant to Clause 21.8 of the Standby Letter of Credit Facility Agreement dated as of 28 November 2007 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalised terms used herein and not otherwise defined herein have the meanings assigned to such terms in the Credit Agreement), among Talbot Holdings Ltd., Validus Holdings, Ltd., the lenders from time to time party thereto (the “Lenders”), Lloyds TSB Bank plc as agent (in such capacity, the “Agent”) and security trustee (in such capacity, the “Security Trustee”) and ING Bank N.V., London Branch as structuring agent, this certificate together with Annex 1 attached hereto is the Borrowing Base Certificate as of [·], 20[·]. The amount and valuation of each of the components of the Borrowing Base set forth on Annex 1 has been determined pursuant to the Credit Agreement.

 

This Borrowing Base Certificate is a complete and correct representation of the Borrowing Base as of [·], 20[·].

 

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

154

 

ANNEX 1

 

	
 
    	
 
    	
Value
    	
 
    	
Advance Rate
    	
 
    	
 
    	
 
    	
Borrowing Base
   Contribution
    	
 
    
	
Cash
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Category of Eligible   Securities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
x
    	
 
    	
 
    	
=
    	
 
    	
$
    	
 
    	
 
    
	
Total Borrowing Base
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    

 

155

 

SCHEDULE 11

EXISTING LIENS

 

1.           Debenture dated 25 March 2003 and granted by the Original Borrower in favour of Lloyds TSB Bank plc securing all money and liabilities due, owing or incurred by the Original Borrower to Lloyds TSB Bank plc.

 

2.           Liens over monies held in insurance broking accounts by Underwriting Risk Services Ltd held in trust for the policyholders and underwriters.

 

3.           Liens over monies held in insurance broking accounts by Underwriting Risk Services (Middle East)  Ltd. held in trust for the policyholders and underwriters.

 

156

 

SCHEDULE 12

EXISTING INTERCOMPANY ARRANGEMENTS AND AGREEMENTS

 

1.           Talbot Insurance (Bermuda), Ltd.’s reinsurance/FAL arrangements with the Account Party pursuant to the slips entered into in November 2006, November 2007, November 2008 and the slip entered in November 2009.

 

2.           The Original Borrower ‘s FAL procurement and contingent fee agreement with Talbot 2002 Underwriting Capital Ltd, amended and restated in November 2009.

 

3.           Restrictions on the movement of assets as a result of the Lloyd’s Deeds entered into by the Original Borrower and its subsidiaries.

 

4.           Liens over monies held in the insurance broking accounts of Underwriting Risk Services Ltd and by Underwriting Risk Services (Middle East)  Ltd. (as described in Schedule 11 (Existing Liens)).

 

157

 

SCHEDULE 13

PERMITTED SUBSIDIARY INDEBTEDNESS

 

1.           A Guarantee and Indemnity granted by Talbot Underwriting Holdings Ltd (“TUHL”) in favour of Lloyds TSB Bank plc in respect of certain obligations of Talbot Underwriting Services Ltd (“TUSL”), a wholly-owned subsidiary of TUHL, pursuant to which TUHL guarantees the discharge of all monies and liabilities now or hereafter due owing or incurred by TUSL to the Bank, up to a limit of £3,000,000, together with interest, commission and costs as therein provided.

 

2.           A Guarantee and Indemnity granted by TUHL in favour of Lloyds TSB Bank plc in respect of certain obligations of Underwriting Risk Services Ltd (“URSL”), a wholly-owned subsidiary of TUHL, pursuant to which TUHL guarantees the discharge of all monies and liabilities now or hereafter due owing or incurred by URSL to Lloyds TSB Bank plc, up to a limit of £3,000,000, together with interest, commission and costs as therein provided.

 

158

 

SCHEDULE 14

SUBSIDIARIES

 

	
Name of Subsidiary:
    	
 
    	
Jurisdiction of
   Organisation:
    	
 
    	
Direct Owners:
    	
 
    	
Percentage
   Ownership:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Validus   Reinsurance, Ltd.
    	
 
    	
Bermuda
    	
 
    	
Validus   Holdings, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Validus   Research, Inc.
    	
 
    	
Canada
    	
 
    	
Validus   Reinsurance, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Validus   Specialty, Inc.
    	
 
    	
Delaware,   USA
    	
 
    	
Validus   Reinsurance, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Validus   Reaseguros, Inc.
    	
 
    	
Florida,   USA
    	
 
    	
Validus   Specialty, Inc.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Validus   Financial Services Ltd.
    	
 
    	
Bermuda
    	
 
    	
Validus   Holdings, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Validus   America, Inc.
    	
 
    	
Delaware,   USA
    	
 
    	
Validus   Holdings, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Underwriting   Risk Services Holdings (Bermuda), Ltd.
    	
 
    	
Bermuda
    	
 
    	
Validus   Holdings, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Validus   Services, Inc.
    	
 
    	
Delaware,   USA
    	
 
    	
Validus   Specialty, Inc.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Validus   Amalgamation Subsidiary, Ltd.
    	
 
    	
Bermuda
    	
 
    	
Validus   Reinsurance, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Validus   Re Chile S.A.
    	
 
    	
Chile
    	
 
    	
Validus   Reinsurance, Ltd.
    	
 
    	
99
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Underwriting   Risk Services, S.A.
    	
 
    	
Chile
    	
 
    	
Validus   Reinsurance, Ltd.
    	
 
    	
99
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IPCRe   Limited
    	
 
    	
Bermuda
    	
 
    	
Validus   Amalgamation Subsidiary, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Underwriting   Services Ltd.
    	
 
    	
Bermuda
    	
 
    	
Validus   Amalgamation Subsidiary, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Validus   Re Europe Limited
    	
 
    	
Ireland
    	
 
    	
IPCRe   Limited
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Underwriting   Risk Services, Inc.
    	
 
    	
Delaware,   USA
    	
 
    	
Validus   Specialty, Inc.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Validus   Managers Ltd.
    	
 
    	
Bermuda
    	
 
    	
Validus   Financial Services Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AlphaCat   Re 291, Ltd.
    	
 
    	
Bermuda
    	
 
    	
Validus   Reinsurance, Ltd.
    	
 
    	
35
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AlphaCat   Fund Ltd.
    	
 
    	
Bermuda
    	
 
    	
Validus   Managers Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AlphaCat   Reinsurance Ltd.
    	
 
    	
Bermuda
    	
 
    	
AlphaCat   Fund Ltd.
    	
 
    	
100
    	
%
    

 

159

 

	
AlphaCat   Master Fund Ltd.
    	
 
    	
Bermuda
    	
 
    	
AlphaCat   Fund Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AlphaCat   High Return Fund Ltd.
    	
 
    	
Bermuda
    	
 
    	
Validus   Managers Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TV   Holdings LLC
    	
 
    	
Delaware,   USA
    	
 
    	
Validus   Holdings, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TV   Merger Sub LLC
    	
 
    	
Delaware,   USA
    	
 
    	
TV   Holdings LLC
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Talbot   Entities:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Talbot   Holdings, Ltd.
    	
 
    	
Bermuda
    	
 
    	
Validus   Holdings, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Talbot   Capital Ltd.
    	
 
    	
Bermuda
    	
 
    	
Talbot   Holdings, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Talbot   2002 Underwriting Capital Ltd.
    	
 
    	
UK
    	
 
    	
Talbot   Holdings, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Talbot   Underwriting Holdings Ltd.
    	
 
    	
UK
    	
 
    	
Talbot   Holdings, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Talbot   Insurance (Bermuda) Ltd.
    	
 
    	
Bermuda
    	
 
    	
Talbot   Holdings, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Talbot   Underwriting Capital Ltd. (Dormant)
    	
 
    	
UK
    	
 
    	
Talbot   Holdings, Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Talbot   Underwriting Ltd.
    	
 
    	
UK
    	
 
    	
Talbot   Underwriting Holdings Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Underwriting   Risk Services Ltd.
    	
 
    	
UK
    	
 
    	
Talbot   Underwriting Holdings Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Talbot   Underwriting Services Ltd.
    	
 
    	
UK
    	
 
    	
Talbot   Underwriting Holdings Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Yachtsure   Ltd. (Dormant)
    	
 
    	
UK
    	
 
    	
Talbot   Underwriting Holdings Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Marinasure   Ltd. (Dormant)
    	
 
    	
UK
    	
 
    	
Talbot   Underwriting Holdings Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Talbot   Risk Services Pte Ltd.
    	
 
    	
Singapore
    	
 
    	
Talbot   Underwriting Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Underwriting   Risk Services Italia SRL
    	
 
    	
Italy
    	
 
    	
Underwriting   Risk Services Ltd.
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Underwriting   Risk Services (Middle East) Ltd
    	
 
    	
Dubai
    	
 
    	
Underwriting   Risk Services Ltd.
    	
 
    	
50
    	
%
    

 

160

 

SCHEDULE 15

EXISTING AFFILIATE TRANSACTIONS

 

1.           Reinsurance agreements with Group Ark Insurance Holdings Ltd. (“Group Ark”) in which the Original Guarantor and/or its subsidiaries has ceded premiums to/from Group Ark.

 

2.           Subscription Agreements dated December 9, 2005 by and between the Original Guarantor and each of its Members, for the purchase of the Voting Common Stock or Non-Voting Common Stock, as the case may be, and the transactions contemplated thereby.

 

3.           Shareholders’ Agreement dated December 12, 2005 by and among the Original Guarantor and its Members listed on the signature pages thereto, and the transactions contemplated thereby.

 

4.           Warrant Agreements dated December 12, 2005, by and among the Original Guarantor and certain of its Members, to purchase Voting Common Stock of Holdings.

 

5.           Warrant Agreements dated December 12, 2005, by and among the Original Guarantor and certain of its Members, to purchase Non-Voting Common Stock of the Original Borrower.

 

6.           Discretionary Advisory Agreement and Risk Reporting and Investment Accounting Services Agreement dated December 8, 2005 by and among the Original Guarantor and Goldman Sachs Asset Management, LP.

 

7.           Reinsurance Agreements to which the Original Guarantor and/or its subsidiaries are a party and Tiger Risk LLC is acting as an intermediary.

 

8.           Portfolio Management Agreement to be entered into between the Original Guarantor and Conning, Inc.

 

161

 

SCHEDULE 16

ADDITIONAL LENDER ACCESSION LETTER

 

	
To:
    	
[·] as Agent
    
	
 
    	
 
    
	
From:
    	
[Additional Lender]
    
	
 
    	
 
    
	
Dated:
    	
 
    

 

Dear Sirs,

 

1.           We refer to an agreement (the “Credit Agreement”) dated 28 November 2007 (as, from time to time, amended, restated, varied, novated or supplemented) and made between Talbot Holdings Ltd. as borrower, Validus Holdings, Ltd. as guarantor, ING Bank N.V., London Branch and Lloyds TSB Bank plc as mandated lead arrangers, Lloyds TSB Bank plc as agent and security trustee, the financial institutions defined therein as Lenders and others.

 

2.           This letter shall take effect as an Additional Lender Accession Letter for the purpose of the Credit Agreement.  Terms defined in the Credit Agreement have the same meaning in this letter unless given a different meaning in this letter.

 

3.           We hereby agree to become a “Lender” and to assume a Commitment in an amount of $[·].

 

4.           We confirm that:

 

(a)             we are an Approved Credit Institution; and

 

(b)            we have received a copy of the Credit Agreement together with such other documents and information as we have required in connection with this transaction and that we have not relied and will not hereafter rely on any other Finance Party to check or enquire on our behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of any such information and further agree that we have not relied and will not rely on any other Finance Party to assess or keep under review on our behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Obligors.

 

5.           We hereby undertake with each of the other parties to the Credit Agreement that we will perform in accordance with their terms all those obligations which by the terms of the Finance Documents will be assumed by us after delivery of this letter to the Agent.

 

6.           Our Facility Office address and related details are as follows:

 

Address:

 

Fax:

 

Telephone:

 

Contact Name:

 

Account for Payments:

 

162

 

[·]

 

7.           This Letter and any non-contractual obligations arising out of or in connection with it are governed by and construed in accordance with English law.

 

	
Signed
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
For and on behalf of
    	
 
    
	
[Additional Lender]
    	
 
    

 

This Letter is accepted as an Additional Lender Accession Letter for the purposes of the Credit Agreement by the Agent.

 

[Agent]

 

By:

 

163

 

SCHEDULE 17

FORM OF OBLIGOR ACCESSION LETTER

 

	
To:
    	
Lloyds TSB Bank plc as Agent and Security   Trustee for itself and each of the other Secured Parties
    
	
 
    	
 
    
	
From:
    	
[Subsidiary]   and [Original Guarantor]
    

 

Dated:

 

Dear Sirs

 

1.           We refer to an agreement (the “Credit Agreement”) dated 28 November 2007 (as, from time to time, amended, restated, varied, novated or supplemented) and made between Talbot Holdings Ltd. as original borrower, Validus Holdings, Ltd. as original guarantor, ING Bank N.V., London Branch and Lloyds TSB Bank plc as mandated lead arrangers, Lloyds TSB Bank plc as agent and security trustee, the financial institutions defined therein as Lenders and others.

 

2.           This letter (the “Obligor  Accession Letter”) shall take effect as an Obligor Accession Letter for the purposes of the Credit Agreement.  Terms defined in the Credit Agreement have the same meaning in paragraphs 1 to 3 of this Obligor Accession Letter unless given a different meaning in this Obligor Accession Letter.

 

3.           [Subsidiary] agrees to become an Additional [Borrower]/[Guarantor] and to be bound by the terms of the Credit Agreement and the other Finance Documents as an Additional [Borrower]/[Guarantor] pursuant to Clause [26.2 (Additional Borrowers)]/[Clause 26.4 (Additional Guarantors)] of the Credit Agreement.  [Subsidiary] is a company duly incorporated under the laws of [name of relevant jurisdiction] and is a limited liability company and registered number [                   ].

 

4.           [Subsidiary’s] administrative details for the purposes of the Credit Agreement are as follows:

 

Address:

 

Fax No.:

 

Attention:

 

5.           This Obligor Accession Letter and any non-contractual obligations arising out of or in connection with it are governed by English law.

 

THIS OBLIGOR ACCESSION LETTER has been signed on behalf of the Original Guarantor and executed as a deed by [Subsidiary] and is delivered on the date stated above.

 

 

[Subsidiary]

 

164

 

	
[EXECUTED AS A DEED         )
    	
 
    
	
 
    	
 
    
	
By: [Subsidiary]         )
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Director/Secretary
    

 

OR

 

	
[EXECUTED AS A DEED  
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By: [Subsidiary]
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature of Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name of Director
    
	
 
    	
 
    	
 
    
	
in the presence of
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature of witness
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name of witness
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Address of witness
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Occupation of witness]
    

 

The Original Guarantor

 

	
 
    	
 
    	
[Original   Guarantor]
    

 

By:

 

165

 

SCHEDULE 18

FORM OF OBLIGOR RESIGNATION LETTER

 

	
To:
    	
Lloyds TSB Bank plc as Agent
    
	
 
    	
 
    
	
From:
    	
[resigning Obligor]   and [Parent]
    
	
 
    	
 
    
	
Dated:
    	
 
    

 

Dear Sirs

 

1.           We refer to an agreement (the “Credit Agreement”) dated 28 November 2007 (as, from time to time, amended, restated, varied, novated or supplemented) and made between Talbot Holdings Ltd. as borrower, Validus Holdings, Ltd. as guarantor, ING Bank N.V., London Branch and Lloyds TSB Bank plc as mandated lead arrangers, Lloyds TSB Bank plc as agent and security trustee, the financial institutions defined therein as Lenders and others.

 

2.           This is an Obligor Resignation Letter.  Terms defined in the Credit Agreement have the same meaning in this Obligor Resignation Letter unless given a different meaning in this Obligor Resignation Letter.

 

3.           Pursuant to [Clause 26.3 (Resignation of a Borrower)]/[Clause 26.5 (Resignation of a Guarantor)], we request that [resigning Obligor] be released from its obligations as a [Borrower]/[Guarantor] under the Credit Agreement.

 

4.           We confirm that:

 

(a)             no Default is continuing or would result from the acceptance of this request; and

 

(b)            [                     ]

 

(ii)         This Obligor Resignation Letter and any non-contractual obligations arising out of or in connection with it are governed by English law.

 

	
[Original   Guarantor]
    	
[Subsidiary]
    
	
 
    	
 
    
	
By:
    	
By:
    

 

166

 

SCHEDULE 19

SPECIFIED AMENDMENTS

 

1.           AMENDMENT TO CLAUSE 21 (INFORMATION UNDERTAKING)

 

Clause 21 of this Agreement is hereby amended by (i) deleting Clause 21.2 thereof in its entirety and substituting in lieu thereof the following new Clause 21.2:

 

“21.2         Quarterly Financial Statements

 

The Original Guarantor shall supply to the Agent (for distribution to the Lenders):

 

21.2.1      as soon as available and in any event within 60 days after the close of each of the first three quarterly accounting periods in each fiscal year of the Original Guarantor, consolidated balance sheets of the Original Guarantor and its subsidiaries as at the end of such period and the related consolidated statements of income, changes in shareholders’ equity and cash flows of the Original Guarantor and its subsidiaries for such period and (in the case of the second and third quarterly periods) for the period from the beginning of the current fiscal year to the end of such quarterly period, setting forth in each case in comparative form the consolidated figures for the corresponding periods of the previous fiscal year, all in reasonable detail and certified by the chief financial officer of the Original Guarantor as presenting fairly in all material respects, in accordance with US GAAP, the information contained therein, subject to changes resulting from normal year-end audit adjustments and the absence of full footnote disclosure.  The Original Guarantor shall be deemed to have delivered the same to the Agent if the Original Guarantor files the same with the SEC via EDGAR and notifies the Agent of such filing; and

 

21.2.2      as soon as available and in any event within 60 days after the close of each quarterly accounting period in each fiscal year of the Original Guarantor, balance sheets of Validus Reinsurance, Ltd. as at the end of such period and the related statements of income, changes in shareholders’ equity and cash flows of Validus Reinsurance, Ltd. for such period and (in the case of the second, third and fourth quarterly periods) for the period from the beginning of the current fiscal year to the end of such quarterly period, setting forth in each case in comparative form the consolidated figures for the corresponding periods of the previous fiscal year, all in reasonable detail and certified by the chief financial officer of the Original Guarantor as presenting fairly in all material respects, in accordance with US GAAP, the information contained therein, subject to changes resulting from normal year-end audit adjustments and the absence of full footnote disclosure.”,

 

and (ii) deleting the words “Clause 21” in 21.3.2 thereof and substituting in lieu thereof 

 

167

 

the words “Clause 22”.

 

2.           AMENDMENTS TO CLAUSE 22.1 (FINANCIAL CONDITION)

 

Clause 22.1 of this Agreement is hereby amended by (i) deleting the word “and” at the end of Clause 22.1.1 thereof, (ii) deleting the “.” at the end of Clause 22.1.2 thereof and substituting “; and” in lieu thereof and (iii) inserting the following new Clause 22.1.3 at the end thereof:

 

“22.1.3 the Original Guarantor will not permit the Qualified Capital and Surplus of Validus Reinsurance, Ltd. at any time to be less than $2,451,837,960.”.

 

3.           AMENDMENTS TO CLAUSE 22.2 (FINANCIAL DEFINITIONS)

 

The following definition shall be added to Clause 22.2 of the Agreement as follows in alphabetical order:

 

““Qualified Capital and Surplus” means, as of any date of determination, the capital and surplus of Validus Reinsurance, Ltd. as at such date, as the same would be reported on statutory financial statements prepared in accordance with the applicable regulatory requirements, but excluding (i) any treasury stock and (ii) the amount of the effects of Financial Accounting Statement No. 115 (which, after adoption of Financial Accounting Statements Nos. 157 and 159 has been measured as the difference between investments carried at estimated fair value and investments carried at amortized cost).”

 

168

 

SIGNATURES

 

[Particulars not restated]

 

169

 

SIGNATURES

 

	
The Borrower
    	
 
    
	
 
    	
 
    
	
TALBOT HOLDINGS LTD.
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Joseph E. (Jeff) Consolino
    	
 
    
	
 
    	
 
    
	
Director
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
The Guarantor
    	
 
    
	
 
    	
 
    
	
VALIDUS HOLDINGS, LTD.
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Joseph E. (Jeff) Consolino
    	
 
    
	
 
    	
 
    
	
President and Chief Financial Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
The Security Provider
    	
 
    
	
 
    	
 
    
	
VALIDUS   REINSURANCE, LTD.
    	
 
    
	
 
    	
 
    
	
By: 
    	
Joseph E. (Jeff) Consolino
    	
 
    
	
 
    	
 
    
	
Director
    	
 
    

 

 

The Arranger

 

	
ING BANK N.V., LONDON BRANCH  
    	
LLOYDS TSB BANK PLC  
    
	
 
    	
 
    
	
By:
    	
/s/ NJ Merchant
    	
 
    	
By:
    	
/s/ Elizabeth   Salter
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
/s/ MER Sharman
    	
 
    	
 
    	
 
    

 

 

The Lenders

 

	
ING BANK N.V., LONDON BRANCH  
    	
LLOYDS TSB BANK PLC  
    
	
 
    	
 
    
	
By:
    	
/s/ NJ Merchant
    	
 
    	
By:
    	
/s/ Elizabeth   Salter
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
/s/ MER Sharman
    	
 
    	
 
    	
 
    

 

 

The Agent and Security Trustee

 

LLOYDS TSB BANK PLC

 

	
By:
    	
/s/ Elizabeth   Salter
    	
 
    

 

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00196-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00196-of-00352.parquet"}]]